Item 1. Financial Statements.

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Item 1. Financial Statements.

Aflac Incorporated and Subsidiaries

Consolidated Statements of Earnings


	Three Months Ended June 30,						Six Months Ended June 30,
(In millions, except for share and per-share amounts - Unaudited)	2026			2025			2026			2025
Revenues:
Net earned premiums, principally supplemental health insurance (1)		$	3,252		$	3,470		$	6,562		$	6,851
Net investment income		984			1,081			1,940			2,036
Net investment gains (losses)		(153)			(421)			(104)			(1,384)
Other income (loss)		34			30			65			55
Total revenues		4,117			4,160			8,463			7,558
Benefits and expenses:
Benefits and claims, excluding reserve remeasurement		1,898			2,047			3,812			4,033
Reserve remeasurement (gains) losses		(46)			(37)			(128)			(78)
Total benefits and claims, net		1,852			2,010			3,684			3,955
Acquisition and operating expenses:
Amortization of deferred policy acquisition costs		218			221			439			437
Insurance commissions		239			251			476			491
Insurance and other expenses		749			804			1,520			1,606
Interest expense		64			52			124			102
Total acquisition and operating expenses		1,270			1,328			2,559			2,636
Total benefits and expenses		3,122			3,338			6,243			6,591
Earnings before income taxes		995			822			2,220			967
Income taxes		170			223			376			339
Net earnings		$	825		$	599		$	1,844		$	628
Net earnings per share:
Basic		$	1.64		$	1.12		$	3.63		$	1.16
Diluted		1.63			1.11			3.61			1.16
Weighted-average outstanding common shares used in computing earnings per share (In thousands):
Basic		504,123			536,688			508,572			540,676
Diluted		505,578			538,425			510,150			542,629
Cash dividends per share		$	.61		$	.58		$	1.22		$	1.16

(1) Includes a gain (loss) of an immaterial amount for the three- and six-month periods ended June 30, 2026 and 2025, 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 June 30,						Six Months Ended June 30,
(In millions - Unaudited)	2026			2025			2026			2025
Net earnings		$	825		$	599		$	1,844		$	628
Other comprehensive income (loss) before income taxes:
Unrealized foreign currency translation gains (losses) during period		(64)			179			(167)			531
Unrealized gains (losses) on fixed maturity securities:
Unrealized holding gains (losses) on fixed maturity securities during period		(358)			(764)			(1,458)			(2,305)
Reclassification adjustment for (gains) losses on fixed maturity securities included in net earnings		244			14			258			(26)
Unrealized gains (losses) on derivatives during period		0			1			(4)			3
Effect of changes in discount rate assumptions during period		1,212			2,146			3,013			4,542
Pension liability adjustment during period		(2)			0			(3)			41
Total other comprehensive income (loss) before income taxes		1,032			1,576			1,639			2,786
Income tax expense (benefit) related to items of other comprehensive income (loss)		252			208			410			299
Other comprehensive income (loss), net of income taxes		780			1,368			1,229			2,487
Total comprehensive income (loss)		$	1,605		$	1,967		$	3,073		$	3,115

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)	June 30, 2026 (Unaudited)			December 31, 2025
Assets:
Investments and cash:
Fixed maturity securities available-for-sale, at fair value (no allowance for credit losses in 2026 and 2025, amortized cost $61,810 in 2026 and $62,444 in 2025)		$	58,640		$	60,485
Fixed maturity securities available-for-sale - consolidated variable interest entities, at fair value (amortized cost $3,380 in 2026 and $2,819 in 2025)		4,208			3,636
Fixed maturity securities held-to-maturity, at amortized cost, net of allowance for credit losses of $4 in 2026 and $5 in 2025 (fair value $14,256 in 2026 and $15,476 in 2025)		15,505			16,120
Equity securities, at fair value		925			887
Commercial mortgage and other loans, net of allowance for credit losses of $533 in 2026 and $426 in 2025 (includes $7,509 in 2026 and $7,896 in 2025 of consolidated variable interest entities)		9,354			9,765
Other investments (includes $2,389 in 2026 and $2,320 in 2025 of consolidated variable interest entities)		8,251			6,622
Cash and cash equivalents		6,120			6,245
Total investments and cash		103,003			103,760
Receivables		895			835
Accrued investment income		733			718
Deferred policy acquisition costs		8,948			9,034
Property and equipment, at cost less accumulated depreciation		351			351
Other		2,031			1,772
Total assets		$	115,961		$	116,470
Liabilities and shareholders’ equity:
Liabilities:
Policy liabilities:
Future policy benefits		$	57,181		$	62,320
Unpaid policy claims		553			495
Unearned premiums		1,326			1,323
Other policyholders’ funds		5,288			5,445
Total policy liabilities		64,348			69,583
Income taxes		1,589			1,368
Payables for return of cash collateral on loaned securities		7,340			3,989
Notes payable and lease obligations		8,729			8,409
Other		3,643			3,631
Total liabilities		85,649			86,980
Commitments and contingent liabilities (Note 13)
Shareholders’ equity:
Common stock of $.10 par value. In thousands: authorized 1,900,000 shares in 2026 and 2025; issued 1,358,830 shares in 2026 and 1,357,909 shares in 2025		136			136
Additional paid-in capital		3,105			3,024
Retained earnings		56,218			54,682
Accumulated other comprehensive income (loss):
Unrealized foreign currency translation gains (losses)		(5,048)			(4,847)
Unrealized gains (losses) on fixed maturity securities		(2,753)			(1,809)
Unrealized gains (losses) on derivatives		(16)			(13)
Effect of changes in discount rate assumptions		10,415			8,035
Pension liability adjustment		83			86
Treasury stock, at average cost		(31,828)			(29,804)
Total shareholders’ equity		30,312			29,490
Total liabilities and shareholders’ equity		$	115,961		$	116,470

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, 2025	$	136	$	3,024	$	54,682	$	1,452	$	(29,804)	$	29,490
Net earnings	0		0		1,019		0		0		1,019
Unrealized foreign currency translation gains (losses) during period, net of income taxes	0		0		0		(114)		0		(114)
Unrealized gains (losses) on fixed maturity securities during period, net of income taxes and reclassification adjustments	0		0		0		(856)		0		(856)
Unrealized gains (losses) on derivatives during period, net of income taxes	0		0		0		(3)		0		(3)
Effect of changes in discount rate assumptions during period, net of income taxes	0		0		0		1,423		0		1,423
Pension liability adjustment during period, net of income taxes	0		0		0		(1)		0		(1)
Dividends to shareholders (1) ($.00 per share)	0		0		1		0		0		1
Exercise of stock options	0		2		0		0		0		2
Share-based compensation	0		25		0		0		0		25
Purchases of treasury stock	0		0		0		0		(1,051)		(1,051)
Treasury stock reissued	0		13		0		0		13		26
Balance at March 31, 2026	$	136	$	3,064	$	55,702	$	1,901	$	(30,842)	$	29,961
Net earnings	0		0		825		0		0		825
Unrealized foreign currency translation gains (losses) during period, net of income taxes	0		0		0		(87)		0		(87)
Unrealized gains (losses) on fixed maturity securities during period, net of income taxes and reclassification adjustments	0		0		0		(88)		0		(88)
Unrealized gains (losses) on derivatives during period, net of income taxes	0		0		0		0		0		0
Effect of changes in discount rate assumptions during period, net of income taxes	0		0		0		957		0		957
Pension liability adjustment during period, net of income taxes	0		0		0		(2)		0		(2)
Dividends to shareholders (1) ($.61 per share)	0		0		(309)		0		0		(309)
Exercise of stock options	0		2		0		0		0		2
Share-based compensation	0		26		0		0		0		26
Purchases of treasury stock	0		0		0		0		(992)		(992)
Treasury stock reissued	0		13		0		0		6		19
Balance at June 30, 2026	$	136	$	3,105	$	56,218	$	2,681	$	(31,828)	$	30,312

(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 December 31, 2024	$	136	$	2,894	$	52,277	$	(2,978)	$	(26,231)	$	26,098
Net earnings	0		0		29		0		0		29
Unrealized foreign currency translation gains (losses) during period, net of income taxes	0		0		0		449		0		449
Unrealized gains (losses) on fixed maturity securities during period, net of income taxes and reclassification adjustments	0		0		0		(1,257)		0		(1,257)
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		1,893		0		1,893
Pension liability adjustment during period, net of income taxes	0		0		0		32		0		32
Dividends to shareholders (1) ($.00 per share)	0		0		2		0		0		2
Exercise of stock options	0		4		0		0		0		4
Share-based compensation	0		8		0		0		0		8
Purchases of treasury stock	0		0		0		0		(949)		(949)
Treasury stock reissued	0		13		0		0		14		27
Balance at March 31, 2025	$	136	$	2,919	$	52,308	$	(1,859)	$	(27,166)	$	26,338
Net earnings	0		0		599		0		0		599
Unrealized foreign currency translation gains (losses) during period, net of income taxes	0		0		0		267		0		267
Unrealized gains (losses) on fixed maturity securities during period, net of income taxes and reclassification adjustments	0		0		0		(595)		0		(595)
Unrealized gains (losses) on derivatives during period, net of income taxes	0		0		0		1		0		1
Effect of changes in discount rate assumptions during period, net of income taxes	0		0		0		1,695		0		1,695
Pension liability adjustment during period, net of income taxes	0		0		0		0		0		0
Dividends to shareholders (1) ($.58 per share)	0		0		(312)		0		0		(312)
Exercise of stock options	0		0		0		0		0		0
Share-based compensation	0		30		0		0		0		30
Purchases of treasury stock	0		0		0		0		(839)		(839)
Treasury stock reissued	0		9		0		0		7		16
Balance at June 30, 2025	$	136	$	2,958	$	52,595	$	(491)	$	(27,998)	$	27,200

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

See the accompanying Notes to the Consolidated Financial Statements.

Aflac Incorporated and Subsidiaries

Consolidated Statements of Cash Flows


	Six Months Ended June 30,
(In millions - Unaudited)	2026			2025
Cash flows from operating activities:
Net earnings		$	1,844		$	628
Adjustments to reconcile net earnings to net cash provided (used) by operating activities:
Change in receivables and advance premiums		(32)			(48)
Capitalization of deferred policy acquisition costs		(546)			(503)
Amortization of deferred policy acquisition costs		439			437
Change in policy liabilities		431			(195)
Change in income tax liabilities		(128)			(267)
Net investment (gains) losses		104			1,384
Other, net		(1,032)			(448)
Net cash provided (used) by operating activities		1,080			988
Cash flows from investing activities:
Proceeds from investments sold or matured:
Fixed maturity securities available-for-sale		7,336			7,816
Equity securities		463			240
Fixed maturity securities held-to-maturity		34			2
Commercial mortgage and other loans		1,239			1,075
Costs of investments acquired:
Fixed maturity securities available-for-sale		(9,003)			(9,412)
Equity securities		(457)			(249)
Commercial mortgage and other loans		(914)			(799)
Other investments, net		(1,587)			(1,012)
Settlement of derivatives, net		58			26
Cash received (pledged or returned) as collateral, net		3,673			3,523
Other, net		193			(36)
Net cash provided (used) by investing activities		1,035			1,174
Cash flows from financing activities:
Purchases of treasury stock		(1,984)			(1,729)
Proceeds from borrowings		911			1,039
Principal payments under debt obligations		(400)			0
Dividends paid to shareholders		(603)			(607)
Change in investment-type contracts, net		(138)			(123)
Treasury stock reissued		7			2
Other, net		3			(5)
Net cash provided (used) by financing activities		(2,204)			(1,423)
Effect of foreign exchange rate changes on cash and cash equivalents		(36)			(3)
Net change in cash and cash equivalents		(125)			736
Cash and cash equivalents, beginning of period		6,245			6,229
Cash and cash equivalents, end of period		$	6,120		$	6,965
Supplemental disclosures of cash flow information:
Income taxes paid		$	504		$	605
Interest paid		114			92
Noncash interest		10			10
Noncash real estate acquired in satisfaction of debt		0			247
Noncash financing activities:
Lease obligations		32			19
Treasury stock issued for:
Associate stock bonus		11			12
Shareholder dividend reinvestment		21			22
Share-based compensation grants		6			7

See the accompanying Notes to the Consolidated Financial Statements.

Aflac Incorporated and Subsidiaries

Notes to the Consolidated Financial Statements

(Interim period data - Unaudited)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Aflac Incorporated (the Parent Company) and its subsidiaries (collectively, the Company) primarily sell supplemental health and life insurance in Japan and the United States (U.S.). The Company's insurance business is marketed and administered through Aflac Life Insurance Japan Ltd. (ALIJ) in Japan and through American Family Life Assurance Company of Columbus (Aflac), American Family Life Assurance Company of New York (Aflac New York), Continental American Insurance Company (CAIC), Tier One Insurance Company (TOIC) and Aflac Benefits Solutions, Inc. (ABS) in the U.S. The Company’s operations consist of two reportable business segments: Aflac Japan, which includes ALIJ, and Aflac U.S., which includes Aflac, Aflac New York, CAIC, TOIC, and ABS. Aflac New York is a wholly owned subsidiary of Aflac. Most of the Aflac U.S. policies are individually underwritten and marketed through independent agents. With the exception of dental and vision products administered by ABS, and certain group life insurance products, Aflac U.S. markets and administers group products through CAIC, branded as Aflac Group Insurance. Additionally, Aflac U.S. markets its consumer markets products through TOIC. The Company's insurance operations in Japan and the U.S. service the two markets for the Company's insurance business. The Parent Company, other operating business units that are not individually reportable, reinsurance activities, including reinsurance activity of Aflac Re Bermuda Ltd. (Aflac Re), and other business activities not included in Aflac Japan or Aflac U.S., as well as intercompany eliminations, are included in Corporate and other.

Basis of Presentation

The Company prepares its financial statements in accordance with U.S. generally accepted accounting principles (U.S. GAAP). These principles are established primarily by the Financial Accounting Standards Board (FASB). In these Notes to the Consolidated Financial Statements, references to U.S. GAAP issued by the FASB are derived from the FASB Accounting Standards CodificationTM (ASC). The unaudited consolidated financial statements include the accounts of the Parent Company, its subsidiaries, and those entities required to be consolidated under applicable accounting standards. All material intercompany accounts and transactions have been eliminated.

In the opinion of management, the accompanying unaudited consolidated financial statements of the Company contain all adjustments, consisting of normal recurring accruals, which are necessary to fairly present the consolidated balance sheets as of June 30, 2026 and December 31, 2025, the consolidated statements of earnings and comprehensive income (loss) for the three- and six-month periods ended June 30, 2026 and 2025, the consolidated statements of shareholders' equity for the three-month periods ended March 31, 2026 and 2025 and June 30, 2026 and 2025, and the consolidated statements of cash flows for the six-month periods ended June 30, 2026 and 2025. Results of operations for interim periods are not necessarily indicative of results for the entire year. As a result, these financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2025 (2025 Annual Report).

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires the Company to make estimates based on currently available information when recording transactions resulting from business operations. The most significant items on the Company's balance sheet that involve a greater degree of accounting estimates and actuarial determinations subject to changes in the future are the valuation of investments and derivatives, deferred policy acquisition costs (DAC), liabilities for future policy benefits (LFPB) and income taxes. These accounting estimates and actuarial determinations are sensitive to market conditions, investment yields, interest rates, mortality, morbidity, commission and other acquisition expenses and terminations by policyholders. As additional information becomes available, or actual amounts are determinable, the recorded estimates are revised and reflected in the consolidated financial statements. Although some variability is inherent in these estimates, the Company believes the amounts provided are reasonable and reflective of the best estimates of management.

Reclassifications: Certain reclassifications have been made to prior-year amounts to conform to current-year reporting classifications. These reclassifications had no impact on net earnings or total shareholders' equity.

New Accounting Pronouncements

Accounting Pronouncements Pending Adoption

Accounting Standards Update (ASU) 2024-03 Income Statement (Topic 220) - Disaggregation of Income Statement Expenses

In November 2024, the FASB issued amendments that require disaggregated disclosure, in the notes to the financial statements, of specified information about certain costs and expenses including (1) the amounts of employee compensation, depreciation, and intangible asset amortization; (2) certain expense, gain, or loss amounts that are already required to be disclosed under current U.S. GAAP in the same disclosure as the other disaggregation requirements; (3) qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, and (4) the total amount of selling expenses and, in annual reporting periods, the Company’s definition of selling expenses.

The amendments are effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted. The adoption of this guidance has no impact on the Company’s financial position or results of operations. The Company is evaluating the impact of adoption on its disclosures.

Recent accounting guidance not discussed above is not applicable, did not have, or is not expected to have a material impact to the Company's business.

For additional information on new accounting pronouncements and recent accounting guidance and their impact, if any, on the Company's financial position, results of operations or disclosures, see Note 1 of the Notes to the Consolidated Financial Statements in the 2025 Annual Report.

2. BUSINESS SEGMENT INFORMATION

The Company consists of two reportable insurance business segments: Aflac Japan and Aflac U.S., both of which sell supplemental health and life insurance. In addition, the Parent Company, other operating business units that are not individually reportable, reinsurance activities, including reinsurance activity of Aflac Re, and other business activities not included in Aflac Japan or Aflac U.S., as well as intercompany eliminations, are included in Corporate and other. The Company does not allocate corporate overhead expenses to business segments.

The Company’s reportable segments are regularly reviewed by the Company's Chief Operating Decision Maker (CODM), Senior Executive Vice President and Chief Financial Officer, in deciding how to allocate resources and in assessing performance. The Company's CODM reviews and approves the annual budget and operating forecast, which allocates resources to segments and serves as a key benchmark for tracking performance and accountability of each segment's operating results. The Company’s CODM evaluates the performance of the segments using, in comparison to the annual budget, operating forecast and historical results, a financial performance measure called pretax adjusted earnings and believes this financial performance measure to be vitally important for understanding the underlying profitability drivers and trends of the Company’s insurance business.

Pretax adjusted earnings** are adjusted revenues less benefits and adjusted expenses. The adjustments to both revenues and expenses account for certain items that are outside management’s control because they tend to be driven by general economic conditions and events or are related to infrequent activities not directly associated with insurance operations. The Company excludes income taxes related to operations to arrive at pretax adjusted earnings.

◦Adjusted revenues are U.S. GAAP total revenues excluding net investment gains and losses, except for amortized hedge costs/income related to foreign currency exposure management strategies and net interest income/expense from derivatives associated with certain investment strategies, which are reclassified from net investment gains (losses) and included in adjusted earnings as a component of adjusted net investment income when analyzing operations.

◦Adjusted expenses are U.S. GAAP total acquisition and operating expenses including the impact of interest from derivatives associated with notes payable but excluding any non-recurring or other items not associated with the normal course of the Company’s insurance operations and that do not reflect the Company’s underlying business performance.

Aflac Japan's adjusted revenues as a percentage of the Company's total adjusted revenues were 51% and 54% in the three-month periods and 51% and 54% in the six-month periods ended June 30, 2026 and 2025, respectively. The percentage of the Company's total assets attributable to Aflac Japan was 75% at June 30, 2026, compared with 76% at December 31, 2025.

Information regarding operations by reportable segment and Corporate and other is presented in the following tables.


	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2026		2025		2026		2025
Revenues:
Aflac Japan:
Net earned premiums (1)	$	1,537	$	1,761	$	3,110	$	3,442
Adjusted net investment income	616		699		1,207		1,285
Other income	8		12		16		17
Total adjusted revenue Aflac Japan	2,161		2,472		4,333		4,744
Aflac U.S.:
Net earned premiums	1,539		1,504		3,094		3,006
Adjusted net investment income	208		207		409		409
Other income	24		17		47		34
Total adjusted revenue Aflac U.S.	1,771		1,728		3,550		3,449
Corporate and other (2)	291		336		583		662
Total adjusted revenues	4,223		4,536		8,466		8,855
Net investment gains (losses)	(153)		(421)		(104)		(1,384)
Reconciling items:
Amortized hedge costs	12		11		27		18
Amortized hedge income	(19)		(30)		(37)		(60)
Net interest (income) expense from derivatives associated with certain investment strategies	54		64		111		129
Total revenues	$	4,117	$	4,160	$	8,463	$	7,558

(2) The change in value of federal historic rehabilitation and solar investments in partnerships of $6 and $8 for the three-month periods and $11 and $16 for the six-month periods ended June 30, 2026 and 2025, respectively, is included as a reduction to net investment income. Tax credits on these investments of $5 and $9 for the three-month periods and $10 and $16 for the six-month periods ended June 30, 2026 and 2025, respectively, have been reported as an income tax benefit in the consolidated statements of earnings. See Note 1 of the Notes to the Consolidated Financial Statements in the 2025 Annual Report for additional information on these investments.


	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2026		2025		2026		2025
Adjusted revenues:
Aflac Japan (1)	$	2,161	$	2,472	$	4,333	$	4,744
Aflac U.S.	1,771		1,728		3,550		3,449
Corporate and other (2)	291		336		583		662
Total adjusted revenues	4,223		4,536		8,466		8,855
Benefits and adjusted expenses:
Aflac Japan:
Benefits and claims, excluding reserve remeasurement	1,006		1,186		2,041		2,316
Reserve remeasurement (gains) losses	(23)		(14)		(68)		(39)
Total benefits and claims, net	983		1,172		1,973		2,277
Adjusted expenses:
Amortization of deferred policy acquisition costs	76		85		154		164
Insurance commissions	94		112		189		217
Insurance and other expenses	267		313		517		574
Total benefits and adjusted expenses Aflac Japan	1,420		1,682		2,833		3,232
Aflac U.S.:
Benefits and claims, excluding reserve remeasurement	782		736		1,552		1,467
Reserve remeasurement (gains) losses	(20)		(24)		(56)		(39)
Total benefits and claims, net	762		712		1,496		1,428
Adjusted expenses:
Amortization of deferred policy acquisition costs	142		136		285		273
Insurance commissions	145		139		287		274
Insurance and other expenses	352		353		749		728
Total benefits and adjusted expenses Aflac U.S.	1,401		1,340		2,817		2,703
Corporate and other	301		316		593		599
Total adjusted expenses	$	3,122	$	3,338	$	6,243	$	6,534
Pretax earnings:
Aflac Japan (1)	$	741	$	790	$	1,500	$	1,512
Aflac U.S.	370		388		733		746
Corporate and other (2)	(10)		20		(10)		63
Pretax adjusted earnings	1,101		1,198		2,223		2,321
Other income (loss)	0		0		0		(53)
Net investment gains (losses)	(153)		(421)		(104)		(1,384)
Reconciling items:
Amortized hedge costs	12		11		27		18
Amortized hedge income	(19)		(30)		(37)		(60)
Net interest (income) expense from derivatives associated with certain investment strategies	54		64		111		129
Impact of interest from derivatives associated with notes payable	0		0		0		(4)
Total earnings before income taxes	$	995	$	822	$	2,220	$	967
Income taxes applicable to pretax adjusted earnings	$	218	$	241	$	439	$	458
Effect of foreign currency translation on after-tax adjusted earnings	(27)		23		(35)		15

Internal Reinsurance: Aflac Re is a Bermuda-domiciled insurer that reinsures certain policies issued by Aflac Japan as well as external parties and is reported as part of Corporate and other. Under the internal reinsurance transactions, Aflac Japan's net earned premiums are reduced by the amount of premiums ceded to Aflac Re. Aflac Re recorded net earned premiums of $152 million and $178 million for the three-month periods and $310 million and $356 million for the six-month periods ended June 30, 2026 and 2025, respectively, related to these reinsurance transactions with Aflac Japan. These internal reinsurance transactions have no financial statement impact on a consolidated basis, except for the effect of foreign currency accounting. For additional information on these internal reinsurance transactions, see the accompanying Note 8 and Note 8 of the Notes to the Consolidated Financial Statements in the 2025 Annual Report.

Total Assets: The Company's total assets were as follows:


(In millions)	June 30, 2026			December 31, 2025
Assets:
Aflac Japan		$	87,121		$	88,537
Aflac U.S.		22,968			22,317
Corporate and other		5,872			5,616
Total assets		$	115,961		$	116,470

3. INVESTMENTS

Investment Holdings

The amortized cost and allowance for credit losses for the Company's investments in fixed maturity securities and the fair values of these investments as well as the fair value of the Company's investments in equity securities are presented in the following tables.


	June 30, 2026
(In millions)	Amortized Cost		Allowance for Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities available-for-sale, carried at fair value through other comprehensive income:
Fixed maturity securities:
Yen-denominated:
Japan government and agencies	$	17,381	$	0	$	29	$	4,047	$	13,363
Municipalities	826		0		0		183		643
Mortgage- and asset-backed securities	455		0		0		51		404
Public utilities	2,429		0		74		225		2,278
Sovereign and supranational	315		0		6		22		299
Banks/financial institutions	5,298		0		135		599		4,834
Other corporate	5,371		0		253		684		4,940
Total yen-denominated	32,075		0		497		5,811		26,761
U.S. dollar-denominated:
U.S. government and agencies	207		0		1		4		204
Municipalities	1,085		0		81		45		1,121
Mortgage- and asset-backed securities	5,055		0		264		45		5,274
Public utilities	4,297		0		441		116		4,622
Sovereign and supranational	57		0		18		0		75
Banks/financial institutions	3,932		0		479		27		4,384
Other corporate	18,365		0		2,498		583		20,280
Total U.S. dollar-denominated	32,998		0		3,782		820		35,960
Other currencies:
Mortgage- and asset-backed securities	43		0		4		0		47
Public utilities	50		0		4		0		54
Other corporate	24		0		2		0		26
Total other currencies	117		0		10		0		127
Total securities available-for-sale	$	65,190	$	0	$	4,289	$	6,631	$	62,848


	December 31, 2025
(In millions)	Amortized Cost		Allowance for Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities available-for-sale, carried at fair value through other comprehensive income:
Fixed maturity securities:
Yen-denominated:
Japan government and agencies	$	18,063	$	0	$	41	$	3,727	$	14,377
Municipalities	856		0		5		145		716
Mortgage- and asset-backed securities	297		0		1		38		260
Public utilities	2,519		0		123		174		2,468
Sovereign and supranational	330		0		7		13		324
Banks/financial institutions	5,382		0		170		477		5,075
Other corporate	5,438		0		357		534		5,261
Total yen-denominated	32,885		0		704		5,108		28,481
U.S. dollar-denominated:
U.S. government and agencies	230		0		2		2		230
Municipalities	1,185		0		83		54		1,214
Mortgage- and asset-backed securities	3,854		0		239		35		4,058
Public utilities	4,292		0		465		107		4,650
Sovereign and supranational	57		0		21		0		78
Banks/financial institutions	3,672		0		518		21		4,169
Other corporate	18,967		0		2,740		597		21,110
Total U.S. dollar-denominated	32,257		0		4,068		816		35,509
Other currencies:
Mortgage- and asset-backed securities	44		0		4		0		48
Public utilities	52		0		4		0		56
Other corporate	25		0		2		0		27
Total other currencies	121		0		10		0		131
Total securities available-for-sale	$	65,263	$	0	$	4,782	$	5,924	$	64,121


	June 30, 2026
(In millions)	Amortized Cost		Allowance for Credit Losses		Net Carrying Amount		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities held-to-maturity, carried at amortized cost:
Fixed maturity securities:
Yen-denominated:
Japan government and agencies	$	14,901	$	1	$	14,900	$	5	$	1,209	$	13,696
Municipalities	225		0		225		0		20		205

Public utilities	31		0		31		0		5		26
Sovereign and supranational	337		3		334		3		22		315

Other corporate	15		0		15		0		1		14
Total yen-denominated	15,509		4		15,505		8		1,257		14,256
Total securities held-to-maturity	$	15,509	$	4	$	15,505	$	8	$	1,257	$	14,256


	December 31, 2025
(In millions)	Amortized Cost		Allowance for Credit Losses		Net Carrying Amount		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities held-to-maturity, carried at amortized cost:
Fixed maturity securities:
Yen-denominated:
Japan government and agencies	$	15,461	$	2	$	15,459	$	81	$	713	$	14,827
Municipalities	235		0		235		0		6		229
Public utilities	32		0		32		0		3		29
Sovereign and supranational	381		3		378		6		9		375
Other corporate	16		0		16		0		0		16
Total yen-denominated	16,125		5		16,120		87		731		15,476
Total securities held-to-maturity	$	16,125	$	5	$	16,120	$	87	$	731	$	15,476


	June 30, 2026			December 31, 2025
(In millions)	Fair Value			Fair Value
Equity securities, carried at fair value through net earnings:
Equity securities:
Yen-denominated		$	694		$	609
U.S. dollar-denominated		231			278

Total equity securities		$	925		$	887

For additional information on the Company's valuation methodology for fixed maturity and equity securities, see Note 5.

During the first six months of 2026 and 2025, respectively, the Company did not reclassify any investments from the held-to-maturity category to the available-for-sale category.

Contractual and Economic Maturities

The contractual and economic maturities of the Company's investments in fixed maturity securities at June 30, 2026, were as follows:


(In millions)	Amortized Cost (1)			Fair Value
Available-for-sale:
Due in one year or less		$	1,882		$	2,004
Due after one year through five years		6,851			7,516
Due after five years through 10 years		16,059			16,734
Due after 10 years		34,845			30,869
Mortgage- and asset-backed securities		5,553			5,725
Total fixed maturity securities available-for-sale		$	65,190		$	62,848
Held-to-maturity:
Due in one year or less		$	2		$	2
Due after one year through five years		4,491			4,478
Due after five years through 10 years		3,980			3,919
Due after 10 years		7,032			5,857

Total fixed maturity securities held-to-maturity		$	15,505		$	14,256

(1) Net of allowance for credit losses

Economic maturities are used for certain fixed maturity securities with no stated maturity where the expected maturity date is based on the combination of features in the financial instrument such as the right to call or prepay obligations or changes in coupon rates.

Investment Concentrations

The Company's process for investing in credit-related investments begins with an independent approach to underwriting each issuer's fundamental credit quality. The Company evaluates independently those factors that it believes could influence an issuer's ability to make payments under the contractual terms of the Company's instruments. This includes a thorough analysis of a variety of items including the issuer's country of domicile (including political, legal, and financial considerations); the industry in which the issuer competes (with an analysis of industry structure, end-market dynamics, and regulation); company specific issues (such as management, assets, earnings, cash generation, and capital needs); and contractual provisions of the instrument (such as financial covenants and position in the capital structure). The Company further evaluates the investment considering broad business and portfolio management objectives, including asset/liability needs, portfolio diversification, and expected income.

Investment exposures that individually exceeded 10% of shareholders' equity were as follows:


	June 30, 2026			December 31, 2025
(In millions)	Credit Rating	Amortized Cost	Fair Value	Credit Rating	Amortized Cost	Fair Value
Japan National Government(1)	A+	$29,714	$24,612	A+	$32,618	$28,434

(1) Japan Government Bonds (JGBs) or JGB-backed securities

Net Investment Gains and Losses

Information regarding pretax net investment gains and losses was as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2026		2025		2026		2025
Net investment gains (losses):
Sales and redemptions:
Fixed maturity securities available-for-sale:
Gross gains from sales	$	0	$	5	$	1	$	119
Gross losses from sales	(837)		(98)		(978)		(333)
Foreign currency gains (losses)	599		79		725		240
Other investments:
Gross gains (losses) from sales and redemptions	0		11		(2)		12


Total sales and redemptions	(238)		(3)		(254)		38
Equity securities	87		98		73		37
Impairment losses	(11)		(6)		(35)		(6)
Credit losses:

Fixed maturity securities held-to-maturity	0		0		1		0
Commercial mortgage and other loans	(76)		(61)		(126)		(114)

Loan commitments	(1)		2		1		0
Reinsurance recoverables and other	0		1		(14)		1
Total credit losses	(77)		(58)		(138)		(113)
Derivatives and other:
Derivative gains (losses)	(134)		23		(229)		(22)
Foreign currency gains (losses)	220		(475)		479		(1,318)
Total derivatives and other	86		(452)		250		(1,340)
Total net investment gains (losses)	$	(153)	$	(421)	$	(104)	$	(1,384)

In the three-month period ended June 30, 2026, the Company did not recognize impairment losses on real estate owned (REO) properties. In the six-month period ended June 30, 2026, the Company recognized impairment losses of $24 million on REO properties classified as held-and-used for the production of income. The impairments were based on the Company's evaluation of a material adverse change in occupancy and resulted in an estimated fair value of the REO properties of $179 million. The fair value was based on expected future cash flows utilizing inputs classified as Level 3 under the fair value guidance in ASC 820.

In the three-month and six-month periods ended June 30, 2025, the Company recognized impairment losses of $6 million on office-type REO property classified as held-and-used for the production of income. The impairment was based on the Company's evaluation of a material adverse change in occupancy and resulted in an estimated fair value of the REO property of $12 million. The fair value was based on expected future cash flows utilizing inputs classified as Level 3 under the fair value guidance in ASC 820.

The unrealized holding gains, net of losses, included in net investment gains and losses for the three-month period ended June 30, 2026 that relate to equity securities held at the June 30, 2026 reporting date were $60 million. The unrealized holding gains, net of losses, included in net investment gains and losses for the three-month period ended June 30, 2025 that relate to equity securities held at the June 30, 2025 reporting date were $101 million.

The unrealized holding gains, net of losses, included in net investment gains and losses for the six-month period ended June 30, 2026 that relate to equity securities held at the June 30, 2026 reporting date were $29 million. The unrealized holding gains, net of losses, included in net investment gains and losses for the six-month period ended June 30, 2025 that relate to equity securities held at the June 30, 2025 reporting date were $47 million.

Unrealized Investment Gains and Losses

Effect on Shareholders’ Equity

The net effect on shareholders’ equity of unrealized gains and losses from fixed maturity securities was as follows:


(In millions)	June 30, 2026			December 31, 2025
Unrealized gains (losses) on securities available-for-sale		$	(2,342)		$	(1,142)
Deferred income taxes		(411)			(667)
Shareholders’ equity, unrealized gains (losses) on fixed maturity securities		$	(2,753)		$	(1,809)

Gross Unrealized Loss Aging

The following tables present the fair values and gross unrealized losses of the Company's available-for-sale securities for the periods ended June 30, 2026 and December 31, 2025, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position.


	June 30, 2026
	Total						Less than 12 months						12 months or longer
(In millions)	Fair Value			Unrealized Losses			Fair Value			Unrealized Losses			Fair Value			Unrealized Losses
Fixed maturity securities available- for-sale:
U.S. government and agencies:
U.S. dollar-denominated		$	168		$	4		$	132		$	2		$	36		$	2
Japan government and agencies:
Yen-denominated		11,520			4,047			4,124			173			7,396			3,874
Municipalities:
U.S. dollar-denominated		623			45			98			5			525			40
Yen-denominated		550			183			302			21			248			162
Mortgage- and asset- backed securities:
U.S. dollar-denominated		1,277			45			962			12			315			33
Yen-denominated		333			51			169			8			164			43
Public utilities:
U.S. dollar-denominated		1,286			116			602			8			684			108
Yen-denominated		1,051			225			289			12			762			213

Sovereign and supranational:

Yen-denominated		254			22			219			9			35			13
Banks/financial institutions:
U.S. dollar-denominated		702			27			553			5			149			22
Yen-denominated		3,335			599			611			34			2,724			565
Other corporate:
U.S. dollar-denominated		5,187			583			2,022			24			3,165			559
Yen-denominated		2,705			684			833			48			1,872			636
Total		$	28,991		$	6,631		$	10,916		$	361		$	18,075		$	6,270


	December 31, 2025
	Total						Less than 12 months						12 months or longer
(In millions)	Fair Value			Unrealized Losses			Fair Value			Unrealized Losses			Fair Value			Unrealized Losses
Fixed maturity securities available- for-sale:
U.S. government and agencies:
U.S. dollar-denominated		$	37		$	2		$	0		$	0		$	37		$	2
Japan government and agencies:
Yen-denominated		13,521			3,727			7,966			692			5,555			3,035
Municipalities:
U.S. dollar-denominated		630			54			8			0			622			54
Yen-denominated		520			145			234			6			286			139
Mortgage- and asset- backed securities:
U.S. dollar-denominated		547			35			217			5			330			30
Yen-denominated		183			38			9			1			174			37
Public utilities:
U.S. dollar-denominated		1,055			107			169			2			886			105
Yen-denominated		838			174			0			0			838			174
Sovereign and supranational:

Yen-denominated		276			13			236			0			40			13
Banks/financial institutions:
U.S. dollar-denominated		252			21			62			0			190			21
Yen-denominated		3,467			477			495			26			2,972			451
Other corporate:
U.S. dollar-denominated		4,535			597			620			5			3,915			592
Yen-denominated		2,395			534			640			33			1,755			501
Total		$	28,256		$	5,924		$	10,656		$	770		$	17,600		$	5,154

Analysis of Securities in Unrealized Loss Positions

The unrealized losses on the Company's available-for-sale securities have been primarily related to general market factors such as changes in interest rates, foreign exchange rates, and/or the levels of credit spreads rather than specific concerns with the issuer's ability to pay interest and repay principal.

For available-for-sale securities in an unrealized loss position, the Company performs detailed analyses to identify whether the drivers of the decline in fair value are due to general market factors, such as the recent rise in interest rates, or due to credit-related factors. Identifying the drivers of the declines in fair value helps to align and allocate the Company‘s resources to the review and monitoring of securities with real credit-related concerns that could impact ultimate collection of principal and interest. For any significant declines in fair value determined to be non-interest rate or market-related, the Company performs a more focused review of the related issuers' specific credit profile.

For corporate issuers, the Company evaluates their assets and business profile, including industry dynamics and competitive positioning, financial statements and other available financial data. For non-corporate issuers, the Company analyzes all sources of credit support, including issuer-specific factors. The Company utilizes information available in the public domain and, for certain private placement issuers, from consultations with the issuers directly. The Company also considers ratings from Nationally Recognized Statistical Rating Organizations (NRSROs), as well as the specific characteristics of the security it owns including seniority in the issuer's capital structure, covenant protections, or other relevant features. From these reviews, the Company evaluates the issuers' continued ability to service the Company's investment through payment of interest and principal.

Assuming no credit-related factors develop and excluding any impact resulting from fluctuations in the yen/dollar exchange rate, unrealized gains and losses on available-for-sale securities are expected to diminish as investments near maturity. Based on its credit analysis, the Company believes that the issuers of its available-for-sale securities in the sectors presented in the table above have the ability to service their obligations to the Company. Further, the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases, which may be at maturity.

However, if the Company identifies certain available-for-sale securities where the amortized cost basis exceeds the present value of the cash flows expected to be collected due to credit-related factors, an allowance for credit losses is recognized. Based on an evaluation of its securities currently in an unrealized loss position, the Company has determined that those securities should not have an allowance for credit losses as of June 30, 2026. Refer to the Allowance for Credit Losses Methodology section below for additional information.

As of June 30, 2026 and December 31, 2025, the Company had an immaterial amount of fixed maturity securities on nonaccrual status.

Commercial Mortgage and Other Loans

The following table presents the composition of the carrying value for commercial mortgage and other loans by property type as of the periods presented.


	June 30, 2026				December 31, 2025
(In millions)	Amortized Cost		% of Total		Amortized Cost		% of Total
Commercial mortgage and other loans:
Transitional real estate loans:
Office	$	1,176	11.9	%	$	1,229	12.1	%
Retail	154		1.6		267		2.6
Apartments/Multi-Family	1,350		13.7		1,555		15.3
Industrial	47		.5		75		.7
Hospitality	382		3.9		522		5.1
Other	235		2.4		240		2.4
Total transitional real estate loans	3,344		34.0		3,888		38.2
Commercial mortgage loans:
Office	250		2.5		255		2.5
Retail	172		1.7		217		2.1
Apartments/Multi-Family	499		5.0		539		5.3
Industrial	420		4.2		427		4.2

Other	27		.3		14		.1
Total commercial mortgage loans	1,368		13.7		1,452		14.2
Middle market loans	4,597		46.5		4,404		43.2
Other loans	578		5.8		447		4.4
Total commercial mortgage and other loans	$	9,887	100.0	%	$	10,191	100.0	%
Allowance for credit losses	(533)				(426)
Total net commercial mortgage and other loans	$	9,354			$	9,765

Commercial mortgage loans (CMLs) and transitional real estate loans (TREs) are secured by properties entirely within the U.S. (with the largest concentrations in California (20%), Texas (14%) and Arizona (7%)). Middle market loans (MMLs) are issued only to companies domiciled within the U.S. and Canada.

Transitional Real Estate Loans

TREs are relatively short-term floating rate commercial mortgage loans that are secured by a first lien on the property. These loans provide funding for properties undergoing a change in their physical characteristics and/or economic profile and do not typically require any principal repayment prior to the maturity date.

As of June 30, 2026, the Company had $125 million in outstanding commitments to fund TREs. These commitments are contingent on the final underwriting and due diligence to be performed.

Commercial Mortgage Loans

CMLs are typically fixed rate loans on commercial real estate with partial repayment of principal over the life of the loan with the remaining outstanding principal being repaid upon maturity. This loan portfolio is generally considered higher quality investment grade loans.

Middle Market Loans

MMLs are typically first lien senior secured cash flow loans to small to mid-size companies for working capital, refinancing, acquisition, and recapitalization. These loans are generally considered to be below investment grade.

As of June 30, 2026, the Company had commitments of approximately $696 million to fund future MMLs. These commitments are contingent upon the availability of MMLs that meet the Company's underwriting criteria.

Other Loans

Other loans are primarily infrastructure loans. Infrastructure loans are typically senior secured, financing portfolios of renewable and conventional energy generation assets characterized by predictable, often contractual cash flows for loan repayment. The infrastructure loan portfolio weighted average rating is investment grade.

As of June 30, 2026, the Company had commitments of approximately $83 million to fund future other loans. These commitments are contingent upon the availability of other loans that meet the Company's underwriting criteria.

Past Due and Nonaccrual Loans

The following tables present an aging of past due and nonaccrual loans at amortized cost, before allowance for credit losses, as of the periods presented.


	June 30, 2026
(In millions)	Current		Less Than 90 Days Past Due		90 Days or More Past Due(1)		Total Past Due		Total Loans		Nonaccrual Status
Transitional real estate loans	$	2,556	$	153	$	635	$	788	$	3,344	$	700
Commercial mortgage loans	1,368		0		0		0		1,368		0
Middle market loans	4,490		10		97		107		4,597		97
Other loans	578		0		0		0		578		0
Total	$	8,992	$	163	$	732	$	895	$	9,887	$	797

(1) As of June 30, 2026, there were no loans that were 90 days or more past due that continued to accrue interest.


	December 31, 2025
(In millions)	Current		Less Than 90 Days Past Due		90 Days or More Past Due(1)		Total Past Due		Total Loans		Nonaccrual Status
Transitional real estate loans	$	3,418	$	0	$	470	$	470	$	3,888	$	545
Commercial mortgage loans	1,452		0		0		0		1,452		0
Middle market loans	4,263		58		83		141		4,404		98
Other loans	447		0		0		0		447		0
Total	$	9,580	$	58	$	553	$	611	$	10,191	$	643

(1) As of December 31, 2025, there were no loans that were 90 days or more past due that continued to accrue interest.

For the three-month period ended June 30, 2026, the Company recognized interest income of $1 million on loans that were on nonaccrual status. For the three-month period ended June 30, 2025, the Company recognized no interest income on loans that were on nonaccrual status. For the six-month periods ended June 30, 2026 and 2025, the Company recognized interest income of $7 million and $1 million, respectively, on loans that were on nonaccrual status.
Of these loans, TREs with an amortized cost of $168 million and $30 million had no credit loss allowance as of June 30, 2026 and December 31, 2025, respectively, because these loans are collateral dependent assets for which the estimated fair values of the collateral were in excess of amortized cost.
As of June 30, 2026, there were no MMLs on nonaccrual status without an allowance for credit loss. As of December 31, 2025, MMLs with an amortized cost of $36 million, were on nonaccrual status without an allowance for credit loss.

Loan Modifications to Borrowers Experiencing Financial Difficulties

The Company granted certain loan modifications to borrowers experiencing financial difficulty during the first six months of 2026 and 2025. The types of modifications granted may include interest rate reductions, principal forgiveness, other-than-insignificant payment delays, term extensions or a combination of these types of modifications. The amount, timing, and extent of modifications granted are considered in determining any allowance for credit loss recorded.

Loans that have both been modified and are paid or written off during the period, resulting in an amortized cost balance of zero at the end of the period, are not included in the disclosures below.

The following tables present the amortized cost basis of modified loans to borrowers experiencing financial difficulty and the financial effect of the modifications, disaggregated by loan classification and type of modification.


Three Months Ended June 30, 2026
(In millions)	Amortized Cost (1)		% of Total		Financial Effect
Transitional Real Estate Loans:


Other-than-insignificant payment delays	$	107	3.5	%	Delay in payments of three months on average



Term extension and interest rate reduction	149		4.9		Term extension of 24 months on average and reduction in the weighted-average contractual interest rate from 6.6% to 2.2%
Middle market loans:


Term extension	$	27	.6	%	Term extension of six months on average

(1) Net of allowance for credit losses


Three Months Ended June 30, 2025
(In millions)	Amortized Cost (1)		% of Total		Financial Effect
Transitional real estate loans:

Term extension	$	128	3.1	%	Term extension of 22 months on average
Term extension and interest rate reduction	152		3.7		Term extension of 26 months on average and reduction in the weighted-average contractual interest rate from 4.8% to 4.3%



Middle market loans:

Principal forgiveness	$	4	.1	%	Reduction in the amortized cost basis of $0.3 million
Principal forgiveness and term extension	25		.6		Reduction in the amortized cost basis of $34 million and term extension of 30 months on average

(1) Net of allowance for credit losses


Six Months Ended June 30, 2026
(In millions)	Amortized Cost (1)		% of Total		Financial Effect
Transitional real estate loans:


Other-than-insignificant payment delays	$	107	3.5	%	Delay in payments of three months on average



Term extension and interest rate reduction	149		4.9		Term extension of 24 months on average and reduction in the weighted-average contractual interest rate from 6.6% to 2.2%
Middle market loans:


Term extension	$	27	.6	%	Term extension of six months on average

Principal forgiveness and term extension	6		.1		Reduction in the amortized cost basis of $11 million and term extension of 13 months on average

(1) Net of allowance for credit losses


Six Months Ended June 30, 2025
(In millions)	Amortized Cost (1)		% of Total		Financial Effect
Transitional real estate loans:


Term extension	$	159	3.9	%	Term extension of 20 months on average
Term extension and interest rate reduction	152		3.7		Term extension of 26 months on average and reduction in the weighted-average contractual interest rate from 4.8% to 4.3%




Middle market loans:

Principal forgiveness	$	6	.1	%	Reduction in the amortized cost basis of $4 million
Term extension	33		.8		Term extension of six months on average
Other-than-insignificant payment delays	28		.7		Delay in principal and interest payments of 35 months on average
Principal forgiveness and term extension	25		.6		Reduction in the amortized cost basis of $34 million and term extension of 30 months on average

(1) Net of allowance for credit losses

The following tables present an aging of loans that received modifications in the 12 months preceding the periods presented, at amortized cost.


	June 30, 2026
(In millions)	Current		Less Than 90 Days Past Due		90 Days or More Past Due		Nonaccrual Status
Transitional real estate loans	$	149	$	46	$	89	$	135

Middle market loans	70		10		0		0

Total	$	219	$	56	$	89	$	135


	June 30, 2025
(In millions)	Current		Less Than 90 Days Past Due		90 Days or More Past Due		Nonaccrual Status
Transitional real estate loans	$	592	$	0	$	60	$	60

Middle market loans	106		1		0		0

Total	$	698	$	1	$	60	$	60

The Company closely monitors the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. Loans that were granted a modification in the past 12 months, as of June 30, 2026 and 2025, and subsequently defaulted in the three- and six-month periods ended June 30, 2026 and 2025, were immaterial.

As of June 30, 2026, the Company had no outstanding commitments to lend additional funds to borrowers experiencing financial difficulty that were granted a loan modification in the current reporting period, compared with $15 million as of December 31, 2025.

Allowance for Credit Losses

The following table presents the roll forward of the allowance for credit losses by portfolio segment for loans and by accounting classification for securities.


(In millions)	Transitional Real Estate Loans		Commercial Mortgage Loans		Middle Market Loans		Other Loans and Loan Commitments		Held-to- Maturity Securities		Available- for-Sale Securities		Total
Three Months Ended June 30, 2026:
Balance at March 31, 2026	$	(286)	$	(6)	$	(163)	$	(15)	$	(4)	$	0	$	(474)
(Addition to) release of allowance for credit losses	(29)		0		(46)		(2)		0		0		(77)
Writeoffs, net of recoveries	0		0		0		0		0		0		0
Change in foreign exchange	0		0		0		0		0		0		0
Balance at June 30, 2026	$	(315)	$	(6)	$	(209)	$	(17)	$	(4)	$	0	$	(551)
Three Months Ended June 30, 2025:
Balance at March 31, 2025	$	(203)	$	(15)	$	(150)	$	(19)	$	(5)	$	0	$	(392)
(Addition to) release of allowance for credit losses	(45)		3		(19)		2		0		0		(59)
Writeoffs, net of recoveries	5		0		42		0		0		0		47
Change in foreign exchange	0		0		0		0		0		0		0
Balance at June 30, 2025	$	(243)	$	(12)	$	(127)	$	(17)	$	(5)	$	0	$	(404)
Six Months Ended June 30, 2026:
Balance at December 31, 2025	$	(277)	$	(9)	$	(138)	$	(17)	$	(5)	$	0	$	(446)
(Addition to) release of allowance for credit losses	(46)		3		(82)		0		1		0		(124)
Writeoffs, net of recoveries	8		0		11		0		0		0		19
Change in foreign exchange	0		0		0		0		0		0		0
Balance at June 30, 2026	$	(315)	$	(6)	$	(209)	$	(17)	$	(4)	$	0	$	(551)
Six Months Ended June 30, 2025:
Balance at December 31, 2024	$	(199)	$	(14)	$	(140)	$	(17)	$	(5)	$	0	$	(375)
(Addition to) release of allowance for credit losses	(73)		2		(43)		0		0		0		(114)
Writeoffs, net of recoveries	29		0		56		0		0		0		85
Change in foreign exchange	0		0		0		0		0		0		0
Balance at June 30, 2025	$	(243)	$	(12)	$	(127)	$	(17)	$	(5)	$	0	$	(404)

As of June 30, 2026, the Company identified TREs with an amortized cost of $139 million in anticipation of potential foreclosure or deed in lieu of foreclosure transactions. As of June 30, 2026, the Company established an allowance for credit losses of $86 million related to these loans.

As of June 30, 2026, the Company's held-to-maturity portfolio includes Japan Government and Agency securities with an amortized cost of $14.8 billion that meet the requirements for zero-credit-loss expectation and therefore have been excluded from the measurement of the allowance for credit losses.

Allowance for Credit Losses Methodology

Available-for-sale Securities

For available-for-sale securities, the Company evaluates estimated credit losses only when the amortized cost basis exceeds the present value of the cash flows expected to be collected due to credit related factors. The Company’s methodology for estimating an allowance for credit losses for available-for-sale securities utilizes the discounted cash flow model, based on past events, current market conditions and future economic conditions, as well as industry analysis and credit ratings of the securities. In addition, the Company evaluates the specific issuer’s probability of default and expected recovery of its position in the event of default based on the underlying financial condition and assets of the borrower as well as seniority and/or security of other debt holders in the issuer when developing management’s best estimate of expected cash flows.

An investment in an available-for-sale security may be impaired if the fair value falls below amortized cost. The Company regularly reviews its available-for-sale portfolio for declines in fair value. The Company's available-for-sale impairment model focuses on the ultimate collection of the cash flows from its investments and whether the Company has the intent to sell or if it is more likely than not the Company would be required to sell the security prior to recovery of its amortized cost. The determination of the amount of impairments under this model is based upon the Company's periodic evaluation and assessment of known and inherent risks associated with the respective securities. Such evaluations and assessments are revised as conditions change and new information becomes available.

When determining the Company's intention to sell a security prior to recovery of its amortized cost basis, the Company evaluates facts and circumstances such as, but not limited to, future cash flow needs, decisions to reposition its security portfolio, and risk profile of individual investment holdings. The Company performs ongoing analyses of its liquidity needs, which includes cash flow testing of its policy liabilities, debt maturities, projected dividend payments, and other cash flow and liquidity needs.

Held-to-maturity Securities, Loan Receivables, and Loan Commitments

The Company calculates its allowance for credit losses for held-to-maturity securities, loan receivables and loan commitments by grouping assets with similar risk characteristics when there is not a specific expectation of a loss for an individual asset. For held-to-maturity securities, MMLs, and MML commitments, the Company groups assets by industry, country, and key credit quality indicators. The Company groups CMLs and TREs and respective loan commitments by property type, property location and key credit quality indicators. On a quarterly basis, CMLs and TREs within a portfolio segment that share similar risk characteristics are pooled for the allowance calculation. On an ongoing basis, TREs, CMLs and other loans with dissimilar risk characteristics (i.e., loans with significant declines in credit quality), such as collateral dependent mortgage loans (i.e., when the borrower is experiencing financial difficulty, including when foreclosure is probable), are evaluated individually for credit loss.

The allowance for credit losses for held-to-maturity securities and loan receivables is estimated using a probability-of-default (PD) / loss-given-default (LGD) method, discounted for the time value of money. For held-to-maturity securities, available-for-sale securities, and loan receivables, the Company includes the change in present value due to the passage of time in the change in the allowance for credit losses. The Company’s methodology for estimating credit losses utilizes the contractual maturity date of the financial asset, adjusted when necessary to reflect the expected timing of repayment (such as prepayment options, renewal options, call options, or extension options). The Company applies reasonable and supportable forecasts of macroeconomic variables that impact the determination of PD / LGD over a two-year period for held-to-maturity securities and MMLs. The Company reverts to historical loss information over one year, following the two-year forecast period.

For the CML and TRE portfolio, the Company applies reasonable and supportable forecasts of macroeconomic variables as well as national and local real-estate market factors to estimate future credit losses where the market factors revert back to historical levels over time with the period being dependent on current market conditions, projected market conditions and difference in the current and historical market levels for each factor.

For off-balance sheet credit exposure primarily attributable to loan commitments that are not unconditionally cancellable, the Company considers the contractual period of exposure to credit risk, the likelihood that funding will occur, the risk of loss, and the current conditions and expectations of future economic conditions to estimate the allowance for credit losses.

The Company continuously monitors the estimation methodology, due to changes in portfolio composition, changes in underwriting practices and significant events or conditions and makes adjustments as necessary.

Key Credit Quality Indicators

The Company’s key credit quality indicators used in the grouping of assets are outlined by investment type below.

For held-to-maturity securities and MMLs, the Company’s key credit quality indicator is credit ratings. The Company’s held-to-maturity portfolio is composed of investment grade securities that are senior unsecured instruments, while its MMLs generally have below-investment-grade ratings but are typically senior secured instruments. The Company monitors the credit ratings periodically, but not less frequently than quarterly.
For TREs, the Company’s key credit quality indicators include performance of the loan and loan-to-value (LTV), which is calculated by dividing the current outstanding loan balance by the estimated property value, primarily using values at origination. Given that TREs involve properties undergoing a repositioning of their commercial profile, LTV provides the most insight into the credit risk of the loan. The Company monitors the performance of the loans periodically, but not less frequently than quarterly. The monitoring process also focuses on higher risk loans, which include those that are delinquent or for which foreclosure or deed in lieu of foreclosure is anticipated.
For CMLs, the Company’s key credit quality indicators include LTV and debt service coverage ratios (DSCR). DSCR is the most recently available net operating income of the underlying property compared to the required debt service of the loan.
For other loans, the Company’s key credit quality indicator is credit ratings. The Company monitors these credit ratings periodically, but not less frequently than quarterly.

The following tables present as of June 30, 2026 the amortized cost basis of TREs, CMLs, MMLs, and other loans by year of origination and key credit quality indicator.


Transitional Real Estate Loans
(In millions)	2026		2025		2024		2023		2022		Prior		Total
Loan-to-Value Ratio:
0%-59.99%	$	0	$	0	$	0	$	0	$	141	$	157	$	298
60%-69.99%	0		0		0		0		324		304		628
70%-79.99%	0		0		0		14		515		457		986
80% or greater	65		0		0		0		349		1,018		1,432
Total	$	65	$	0	$	0	$	14	$	1,329	$	1,936	$	3,344
Current-period gross writeoffs:	$	0	$	0	$	0	$	0	$	8	$	0	$	8


Commercial Mortgage Loans
(In millions)	2026		2025		2024		2023		2022		Prior		Total		Weighted-Average DSCR
Loan-to-Value Ratio:
0%-59.99%	$	35	$	11	$	0	$	31	$	0	$	1,061	$	1,138	2.80
60%-69.99%	13		20		0		0		0		77		110		1.91
70%-79.99%	0		0		0		0		0		72		72		1.45
80% or greater	0		0		12		0		0		36		48		0.87
Total	$	48	$	31	$	12	$	31	$	0	$	1,246	$	1,368	2.59
Weighted Average DSCR	1.90		1.83		1.09		2.74		0.00		2.65
Current-period gross writeoffs:	$	0	$	0	$	0	$	0	$	0	$	0	$	0


Middle Market Loans
(In millions)	2026		2025		2024		2023		2022		Prior		Revolving Loans		Total
Credit Ratings:
BBB	$	73	$	13	$	61	$	22	$	0	$	94	$	6	$	269
BB	269		355		506		114		296		774		66		2,380
B	49		291		124		46		232		628		45		1,415
CCC	0		25		3		0		34		273		26		361
CC	6		5		2		0		10		81		8		112
C and lower	0		0		0		0		0		53		7		60
Total	$	397	$	689	$	696	$	182	$	572	$	1,903	$	158	$	4,597
Current-period gross writeoffs:	$	0	$	0	$	0	$	0	$	0	$	11	$	0	$	11


Other Loans
(In millions)	2026		2025		2024		2023		2022		Prior		Revolving Loans		Total
Credit Ratings:
A	$	20	$	0	$	0	$	0	$	60	$	0	$	0	$	80
AA	0		0		0		0		8		3		0		11
BBB	81		37		257		0		24		24		0		423
BB	0		0		0		64		0		0		0		64




Total	$	101	$	37	$	257	$	64	$	92	$	27	$	0	$	578
Current-period gross writeoffs:	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0

Other Investments

The table below presents the composition of the carrying value for other investments as of the periods presented.


(In millions)	June 30, 2026			December 31, 2025
Other investments:
Policy loans		$	204		$	210
Short-term investments (1)		2,815			1,373
Limited partnerships (2)		4,346			4,109
Real estate owned		847			902
Other		39			28
Total other investments		$	8,251		$	6,622

(1) Includes securities lending collateral

(2) Includes tax credit investments and asset classes such as private equity and real estate funds

As of June 30, 2026 and December 31, 2025, all REO was classified as held-and-used for the production of income. Depreciation expense on REO was $8 million for each of the three-month periods ended June 30, 2026 and 2025, and $15 million and $14 million for the six-month periods ended June 30, 2026 and 2025, respectively. Additionally, as of June 30, 2026 and December 31, 2025, accumulated depreciation on REO was $53 million and $41 million, respectively.

The Company had $2.8 billion and $3.0 billion in outstanding commitments to fund investments in limited partnerships, which included $2.2 billion and $2.1 billion of unfunded commitments related to variable interest entities (VIEs) that are non-consolidated as of June 30, 2026 and December 31, 2025, respectively.

Variable Interest Entities

In the normal course of its activities, the Company invests in legal entities that are VIEs. The Company's variable interests in these VIEs are limited to the debt and equity instruments issued by them. With the exception of commitments to limited partnerships and to certain loan investments made in the normal course of business, the Company has not provided any direct or contingent obligations to fund the limited activities of these VIEs, or support related to the limited activities of these VIEs, and does not have any intention to do so in the future, nor has it provided any direct or indirect financial guarantees.

The Company's risk of loss related to its interests in any of its VIEs is typically limited to the carrying value of the related investments, and in certain cases, to any unfunded commitments held in the VIE. For certain reinsurance-related trusts, however, the Company is contractually obligated to contribute additional assets to maintain required collateral levels, potentially exposing the Company to losses exceeding the carrying value of the assets held in the trust.

For those VIEs other than certain unit trust structures, the Company's involvement is passive in nature.

VIEs - Consolidated

If the Company determines that it is the VIE’s primary beneficiary, it consolidates the VIE. Creditors or beneficial interest holders of VIEs where the Company is the primary beneficiary have no recourse to the general credit of the Company except to the extent of the unfunded commitments referenced above, as the Company’s obligation to each VIE is limited to the amount of its committed investment.

The following table presents the carrying value and balance sheet caption in which the assets and liabilities of consolidated VIEs are reported.

Investments in Consolidated Variable Interest Entities


(In millions)	June 30, 2026			December 31, 2025
Assets: (1)
Fixed maturity securities available-for-sale		$	4,208		$	3,636

Commercial mortgage and other loans		7,509			7,896
Other investments (2)		2,389			2,320

Other assets (3)		41			45
Total assets of consolidated VIEs		$	14,147		$	13,897
Liabilities:
Other liabilities (3)		$	887		$	765
Total liabilities of consolidated VIEs		$	887		$	765

(1) As of June 30, 2026, the Company's investments in consolidated VIEs also held cash and cash equivalents of $382 million, of which $63 million was restricted.

(2) Consists entirely of alternative investments in limited partnerships, which represent VIEs where the Company is not the primary beneficiary and therefore are not consolidated

(3) Consists entirely of derivatives

The Company is the sole investor in the consolidated VIEs listed in the table above. The Company invests in fixed maturity securities issued by VIEs that in turn hold U.S. dollar-denominated fixed maturity securities coupled with foreign currency swap agreements. The weighted-average lives of the Company's investments in these VIEs are very similar to the underlying collateral held by these VIEs. The activities of these VIEs are limited to holding invested assets and foreign currency swaps and utilizing the cash flows from these securities to service the VIEs' debt. Neither the Company nor any of its creditors are able to obtain the underlying collateral of these VIEs unless there is an event of default or other specified event. The Company is not a direct counterparty to the foreign currency swap contracts and has no control over them. The Company's loss exposure to these VIEs is limited to its original investment. These consolidated VIEs do not rely on outside or ongoing sources of funding to support their activities beyond the underlying collateral and foreign currency swap contracts, if applicable. The underlying collateral assets and funding of these consolidated VIEs are generally static in nature.

Investments in Unit Trust Structures

The Company utilizes unit trust structures in Aflac Japan to invest in various asset classes, which include CMLs, MMLs, TREs, other loans and limited partnerships. As the sole investor of these VIEs, the Company is required to consolidate these trusts. The limited partnership investments are comprised of private equity and real estate. The Company's loss exposure to these VIEs is limited to its original investments, together with any unfunded portion of the Company's commitments made in the normal course of business to fund certain loan investments and limited partnership investments, as described in the Commercial Mortgage and Other Loans and Other Investments sections of this note. Excluding these commitments, the Company does not provide financial or other support to consolidated VIEs.

Reinsurance-Related Trust

In connection with an assumed reinsurance transaction, assets transferred by the ceding company were placed in a trust to collateralize the Company's obligations to the ceding company. Cash and other assets placed in the trust continue to be owned by the Company; however, their use is restricted based on the terms of the transaction. The trust is a VIE, and the Company consolidates the trust as its primary beneficiary. As of June 30, 2026, assets held in the trust consisted of available-for-sale securities with a carrying value of $618 million and $6 million of cash and cash equivalents.

VIEs - Not Consolidated

The table below presents the carrying value and balance sheet caption in which the Company's investments in VIEs that are not consolidated are reported.

Investments in Variable Interest Entities Not Consolidated


(In millions)	June 30, 2026			December 31, 2025
Assets:
Fixed maturity securities available-for-sale		$	7,805		$	6,750
Other investments (1)		1,796			1,603
Total investments in VIEs not consolidated		$	9,601		$	8,353

(1) Consists entirely of alternative investments in limited partnerships

Certain investments in VIEs that the Company is not required to consolidate are investments that are in the form of debt obligations issued by the VIEs. These fixed maturity securities include structured securities, primarily asset-backed securities. The Company's involvement in the related VIEs is limited to that of a passive investor in asset-backed securities issued by the VIEs. The Company also invests in fixed maturity securities issued by VIEs that are the primary financing vehicles used by their corporate sponsors to raise financing in the capital markets. The variable interests created by these VIEs are principally or solely a result of the debt instruments issued by them. The Company does not have the power to direct the activities that most significantly impact the entity's economic performance, nor does it have the obligation to absorb losses of the VIE entity or the right to receive benefits from the entity that could be significant to the entity. As such, the Company is not the primary beneficiary of these VIEs and therefore is not required to consolidate them.

The Company also holds equity investments in limited partnerships that have been determined to be VIEs. These partnerships primarily invest in private equity and real estate funds. The Company’s maximum exposure to loss on these investments is limited to the amount of its investment and any unfunded commitments. As described in the Other Investments section of this note, the Company makes commitments to fund partnership investments in the normal course of business. Excluding these commitments, the Company did not provide financial or other support to unconsolidated VIEs. The Company is not the primary beneficiary of these VIEs and is therefore not required to consolidate them. The Company classifies these investments as other investments in the consolidated balance sheets.

Securities Lending and Pledged Securities

In the normal course of business, the Company enters into securities lending transactions. Details of the collateral by loaned security type and remaining maturity of the agreements were as follows:


Securities Lending Transactions Accounted for as Secured Borrowings
Remaining Contractual Maturity of the Agreements
	June 30, 2026								December 31, 2025
(In millions)	Overnight and Continuous(1)		Up to 30 days		30-90 days		Total		Overnight and Continuous(1)		Up to 30 days		30-90 days		Total
Securities lending transactions:
Fixed maturity securities:
Japan government and agencies	$	0	$	2,276	$	3,817	$	6,093	$	0	$	1,591	$	1,329	$	2,920

Public utilities	43		0		0		43		54		0		0		54

Banks/financial institutions	223		0		0		223		150		0		0		150
Other corporate	981		0		0		981		865		0		0		865

Total borrowings	$	1,247	$	2,276	$	3,817	$	7,340	$	1,069	$	1,591	$	1,329	$	3,989
Gross amount of recognized liabilities for securities lending transactions							$	7,340							$	3,989

(1) The related loaned security, under the Company's U.S. securities lending program, can be returned to the Company at the transferee's discretion; therefore, they are classified as Overnight and Continuous.

In connection with securities lending, in addition to cash collateral received, the Company received from counterparties no securities collateral at June 30, 2026, compared with $2.2 billion at December 31, 2025, which may not be sold or re-pledged, unless the counterparty is in default. Such securities collateral is not reflected in the consolidated balance sheets.

The Company did not have any repurchase agreements or repurchase-to-maturity transactions outstanding as of June 30, 2026, and December 31, 2025, respectively.

Certain fixed maturity securities can be pledged as collateral as part of derivative transactions, or pledged to support state deposit requirements on certain investment programs. For additional information regarding pledged securities related to derivative transactions, see Note 4.

For additional information on the Company's investments and financial instruments, see the accompanying Notes 4 and 5 and Notes 1, 4 and 5 of the Notes to the Consolidated Financial Statements in the 2025 Annual Report.

4. DERIVATIVE INSTRUMENTS

The Company's freestanding derivative instruments include:

Foreign currency forwards
Foreign currency options
Foreign currency swaps
Cross-currency swaps
Interest rate swaps
Interest rate swaptions (swaptions)
Bond purchase commitments

Foreign currency forwards and options are executed for Aflac Japan in order to hedge the foreign currency exchange risk on the carrying value of certain U.S. dollar-denominated investments. The average maturity of these forwards and options can change depending on factors such as market conditions and types of investments being held. In situations where the maturity of the forwards and options is shorter than the underlying investment being hedged, the Company may enter into new forwards and options near maturity of the existing derivative in order to continue hedging the underlying investment. In forward transactions, Aflac Japan agrees with another party to buy a fixed amount of Japanese yen and sell a

corresponding amount of U.S. dollars at a specified future date. The Company also uses one-sided foreign currency put options to mitigate the settlement risk on U.S. dollar-denominated assets related to extreme foreign exchange rate changes.

From time to time, Aflac Japan also executes foreign currency option transactions in a collar strategy, where Aflac Japan agrees with another party to simultaneously purchase put options and sell call options. In the purchased put transactions, Aflac Japan obtains the option to buy a fixed amount of Japanese yen and sell a corresponding amount of U.S. dollars at a specified future date. In the sold call transactions, Aflac Japan agrees to sell a fixed amount of Japanese yen and buy a corresponding amount of U.S. dollars at a specified future date. The combination of purchasing the put option and selling the call option results in no net premium being paid (i.e., a costless or zero-cost collar).

From time to time, the Company may also enter into foreign currency forwards and options to hedge the foreign currency exchange risk associated with the net investment in Aflac Japan. In these forward transactions, the Company agrees with another party to buy a fixed amount of U.S. dollars and sell a corresponding amount of Japanese yen at a specified price at a specified future date. In the option transactions, the Company may use a combination of foreign currency options to protect expected future cash flows by simultaneously purchasing Japanese yen put options (options that protect against a weakening Japanese yen) and selling Japanese yen call options (options that limit participation in a strengthening Japanese yen). The combination of these two actions create a zero-cost collar. Additionally, the Company enters into purchased options to hedge cash flows from the net investment in Aflac Japan.

The Company enters into foreign currency swaps pursuant to which it exchanges an initial principal amount in one currency for an initial principal amount of another currency, with an agreement to re-exchange the principal amounts at a future date. There may also be periodic exchanges of payments at specified intervals based on the agreed upon rates and notional amounts. Foreign currency swaps are used primarily in the consolidated VIEs held by Aflac Japan to convert foreign-denominated cash flows to Japanese yen in order to minimize cash flow fluctuations. The Company also uses foreign currency swaps to economically hedge the foreign currency exchange risk on certain fixed maturity securities denominated in other foreign currencies held by Aflac Japan, as well as to economically convert certain of its U.S. dollar-denominated senior note and subordinated debenture principal and interest obligations into Japanese yen-denominated obligations.

The Company also uses foreign currency forwards to economically hedge the foreign currency exchange risk on certain variable-rate investments denominated in other foreign currencies held by Aflac Japan.

In order to reduce investment income volatility from its variable-rate investments, the Company enters into receive–fixed, pay–floating interest rate swaps. These derivatives are cleared and settled through a central clearinghouse.

Swaptions are used to mitigate the adverse impact resulting from significant changes in the fair value of U.S. dollar-denominated available-for-sale securities due to fluctuation in interest rates. In a payer swaption, the Company pays a premium to obtain the right, but not the obligation, to enter into a swap contract where it will pay a fixed rate and receive a floating rate. Interest rate swaption collars are combinations of two swaption positions. In order to maximize the efficiency of the collars while minimizing cost, a collar strategy is used whereby the Company purchases a long payer swaption (the Company purchases an option that allows it to enter into a swap where the Company will pay the fixed rate and receive the floating rate of the swap) and sells a short receiver swaption (the Company sells an option that provides the counterparty with the right to enter into a swap where the Company will receive the fixed rate and pay the floating rate of the swap). The combination of purchasing the long payer swaption and selling the short receiver swaption results in no net premium being paid (i.e., a costless or zero-cost collar).

Bond purchase commitments result from repackaged bond structures that are consolidated VIEs whereby there is a delay in the trade date and settlement date of the bond within the structure to ensure completion of all necessary legal agreements to support the consolidated VIE that issues the repackaged bond. Additionally, bond purchase commitments are used to economically hedge interest rate risk on certain fixed income investments. Since the Company has a commitment to purchase the underlying bond at a specified price, the agreement meets the definition of a derivative. The fair value of the derivative is derived based on the current market value of the bond compared to the fixed purchase price to be paid on the settlement date.

Derivative Balance Sheet Classification

The table below summarizes the balance sheet classification of the Company's derivative instruments at fair value. The fair value amounts presented exclude income accruals. The notional amount of derivative contracts represents the basis upon which pay or receive amounts are calculated and are not reflective of exposure or credit risk.


		June 30, 2026								December 31, 2025
(In millions)				Asset Derivatives			Liability Derivatives						Asset Derivatives			Liability Derivatives
Hedge Designation/ Derivative Type	Notional Amount			Fair Value			Fair Value			Notional Amount			Fair Value			Fair Value
Cash flow hedges:
Foreign currency swaps - VIE		$	18		$	0		$	6		$	18		$	0		$	5
Total cash flow hedges		18			0			6			18			0			5





Net investment hedge:
Foreign currency forwards		1,627			121			0			1,828			120			0

Total net investment hedge		1,627			121			0			1,828			120			0
Non-qualifying strategies:
Foreign currency swaps		49			1			0			49			0			0
Foreign currency swaps - VIE		3,004			41			881			2,960			45			760
Foreign currency forwards		1,412			3			19			945			0			18
Foreign currency options		9,179			17			59			25,000			0			0

Interest rate swaps		25,950			0			107			36,728			14			189



Total non-qualifying strategies		39,594			62			1,066			65,682			59			967
Total derivatives		$	41,239		$	183		$	1,072		$	67,528		$	179		$	972

Cash Flow Hedge

The Company designates and accounts for certain foreign currency swaps as cash flow hedges when they meet the requirements for hedge accounting. For certain variable-rate U.S. dollar-denominated available-for-sale securities held by Aflac Japan via consolidated VIEs, foreign currency swaps are used to swap the U.S. dollar variable rate interest and principal payments to fixed rate Japanese yen interest and principal payments. The remaining maximum length of time over which these cash flows are hedged is approximately three months.

Fair Value Hedge

The Company designates and accounts for certain foreign currency forwards, options, and interest rate swaptions as fair value hedges when they meet the requirements for hedge accounting.

Foreign currency forwards and options hedge the foreign currency exchange risk associated with certain U.S. dollar-denominated available-for-sale securities held by Aflac Japan. For these derivatives and the related hedged items, gains and losses included in the assessment of hedge effectiveness are included in current earnings.

The change in the fair value of the foreign currency forwards related to changes in the difference between the spot rate and the forward price, and the change in fair value of the foreign currency option related to the time value of the option, are excluded from the assessment of hedge effectiveness and are included in current earnings.

Interest rate swaptions hedge the interest rate risk associated with certain U.S. dollar-denominated available-for-sale securities held by Aflac Japan. Gains and losses associated with these derivatives and included in the assessment of hedge effectiveness, premium amortization and time value amortization while the hedge items are still outstanding, are included in current earnings. If the interest rate swaption is terminated but the hedged item is still outstanding, the amortization of the disposal amount of the interest rate swaption is included in current earnings over the remaining life of the hedged items. When the related hedged items are redeemed, the time value gains and losses for the interest rate swaptions are included in current earnings, which is consistent with the accounting for the impact of the hedged item.

The change in the fair value of interest rate swaptions related to the time value of the swaption is excluded from the assessment of hedge effectiveness and is included in the consolidated statements of comprehensive income (loss) and amortized into earnings over its legal term.

Fair Value Hedging Relationships

The following table presents the carrying amounts of (1) assets designated and qualified as hedged items in fair value hedges of interest rate risk and (2) the related cumulative hedge adjustment included in the carrying amount. The Company had no fair value hedges of interest rate risk as of June 30, 2026 and December 31, 2025; therefore, the amounts presented in the table below are related to previous fair value hedges of interest rate risk that were discontinued.


(In millions)	Carrying Amount of the Hedged Assets/(Liabilities)(1)					Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of Hedged Assets/(Liabilities)
		June 30, 2026		December 31, 2025		June 30, 2026		December 31, 2025
Fixed maturity securities		$	1,045	$	1,238	$	98	$	121

(1) The balance includes hedging adjustment on discontinued hedging relationships of $98 in 2026 and $121 in 2025.

Net Investment Hedge

The Company's investment in Aflac Japan is affected by changes in the foreign exchange rate. To mitigate this exposure, the Parent Company designated some of its Japanese yen-denominated liabilities (see Note 9) as non-derivative net investment hedges and certain foreign currency forwards and options as derivative net investment hedges of the foreign currency exchange risk associated with the Company's net investment in Aflac Japan.

The Company's net investment hedge was effective during the three- and six-month periods ended June 30, 2026 and 2025, respectively.

Non-qualifying Strategies

The Company uses foreign currency swaps to economically hedge the foreign currency exchange risk associated with certain investments denominated in other foreign currencies held by Aflac Japan.

For the Company's derivative instruments in consolidated VIEs that do not qualify for hedge accounting, changes in fair value are reported in current earnings. The gain or loss in earnings includes amounts attributable to the derivatives in those investment structures. While the change in fair value of the derivative instrument is reported in current earnings, the change in the fair value of the available-for-sale securities associated with these instruments is included in accumulated other comprehensive income.

The Company uses foreign currency forwards and options to economically hedge the foreign currency exchange risk associated with certain U.S. dollar-denominated loan receivables held by Aflac Japan. These arrangements are not designated as accounting hedges because the foreign currency remeasurement gains and losses associated with the loan receivables substantially offsets gains and losses from foreign currency forwards in current period earnings.

Additionally, the Company uses foreign currency forwards to economically hedge the foreign currency exchange risk associated with certain U.S. dollar-denominated available-for-sale securities and certain investments denominated in other foreign currencies held by Aflac Japan.

The Company uses interest rate swaps to economically convert the variable rate investment income to a fixed rate on certain variable-rate investments.

The Company uses bond purchase commitments to economically hedge interest rate risk on certain fixed income investments, including certain bonds within the VIE structure.

Impact of Derivatives and Hedging Instruments

The following table summarizes the impact to earnings and other comprehensive income (loss) from all derivatives and hedging instruments.


	Three Months Ended June 30,
	2026										2025
(In millions)	Net Investment Income			Net Investment Gains (Losses)				Other Comprehensive Income (Loss)			Net Investment Income			Net Investment Gains (Losses)				Other Comprehensive Income (Loss)
Qualifying hedges:
Cash flow hedges:
Foreign currency swaps - VIE		$	0		$	0			$	0		$	0		$	(1)			$	1
Total cash flow hedges		0			0		(1)		0			0			(1)		(1)		1





Net investment hedge:
Non-derivative hedging instruments					0				84						0				(139)

Foreign currency forwards					13				40						26				(81)

Total net investment hedge					13				124						26				(220)
Non-qualifying strategies:
Foreign currency swaps					1										0
Foreign currency swaps - VIE					(98)										30
Foreign currency forwards					(27)										(7)
Foreign currency options					(25)										(14)

Interest rate swaps					(4)										(11)
Forward bond purchase commitment					6										0

Total non-qualifying strategies					(147)										(2)
Total		$	0		$	(134)			$	124		$	0		$	23			$	(219)

(1) Impact of cash flow hedges reported as net investment gains (losses) includes an immaterial amount of losses reclassified from accumulated other comprehensive income (loss) into earnings during the three-month period ended June 30, 2026, and $1 of losses during the three-month period ended June 30, 2025.


	Six Months Ended June 30,
	2026										2025
(In millions)	Net Investment Income			Net Investment Gains (Losses)				Other Comprehensive Income (Loss)			Net Investment Income			Net Investment Gains (Losses)				Other Comprehensive Income (Loss)
Qualifying hedges:
Cash flow hedges:
Foreign currency swaps - VIE		$	0		$	4			$	(4)		$	0		$	(2)			$	3
Total cash flow hedges		0			4		(1)		(4)			0			(2)		(1)		3





Net investment hedge:
Non-derivative hedging instruments					0				189						0				(379)
Foreign currency forwards					24				87						62				(225)

Total net investment hedge					24				276						62				(604)
Non-qualifying strategies:
Foreign currency swaps					2										0
Foreign currency swaps - VIE					(153)										(27)
Foreign currency forwards					(49)										(7)
Foreign currency options					(43)										(19)
Interest rate swaps					(15)										(29)
Forward bond purchase commitment					1										0

Total non-qualifying strategies					(257)										(82)
Total		$	0		$	(229)			$	272		$	0		$	(22)			$	(601)

(1) Impact of cash flow hedges reported as net investment gains (losses) includes $4 of gains reclassified from accumulated other comprehensive income (loss) into earnings during the six-month period ended June 30, 2026, and $2 of losses during the six-month period ended June 30, 2025.

As of June 30, 2026, an immaterial amount of deferred losses on derivative instruments recorded in accumulated other comprehensive income are expected to be reclassified into earnings during the next 12 months.

Credit Risk Assumed through Derivatives

For the foreign currency swaps associated with the Company's VIE investments for which it is the primary beneficiary, the Company bears the risk of loss due to counterparty default even though it is not a direct counterparty to those contracts.

The Company is a direct counterparty to the foreign currency swaps that it has entered into in connection with certain of its senior notes and subordinated debentures; foreign currency forwards; and foreign currency options, and therefore the Company is exposed to credit risk in the event of nonperformance by the counterparties in those contracts. The risk of counterparty default for the Company's foreign currency swaps, certain foreign currency forwards, and foreign currency options is mitigated by collateral posting requirements that counterparties to those transactions must meet.

As of June 30, 2026, all of the Company's derivative agreement counterparties were investment grade.

The Company engages in over-the-counter (OTC) bilateral derivative transactions directly with unaffiliated third parties under International Swaps and Derivatives Association, Inc. (ISDA) agreements and other documentation. Most of the ISDA agreements also include Credit Support Annexes (CSAs) provisions, which generally provide for two-way collateral postings at the first dollar of exposure. The Company mitigates the risk that counterparties to transactions might be unable to fulfill their contractual obligations by monitoring counterparty credit exposure and collateral value while generally requiring that collateral be posted at the outset of the transaction. In addition, a significant portion of the derivative transactions have provisions that give the counterparty the right to terminate the transaction upon a downgrade of the Company's financial strength rating. The actual amount of payments that the Company could be required to make depends on market conditions, the fair value of outstanding affected transactions, and other factors prevailing at and after the time of the downgrade.

The Company also engages in OTC cleared derivative transactions through regulated central clearing counterparties. These positions are marked to market and margined on a daily basis (both initial margin and variation margin), and the Company has minimal exposure to credit-related losses in the event of nonperformance by counterparties to these derivatives.

Collateral posted by the Company to third parties for derivative transactions can generally be repledged or resold by the counterparties. The aggregate fair value of all derivative instruments with credit-risk-related contingent features that were in a net liability position by counterparty was approximately $957 million and $861 million as of June 30, 2026 and December 31, 2025, respectively. If the credit-risk-related contingent features underlying these agreements had been triggered on June 30, 2026, the Company estimates that it would be required to post a maximum of $796 million of additional collateral to these derivative counterparties. The Company is generally allowed to sell or repledge collateral obtained from its derivative counterparties, although it does not typically exercise such rights. See the Offsetting tables below for collateral posted or received as of the reported balance sheet dates.

Offsetting of Financial Instruments and Derivatives

Most of the Company's derivative instruments are subject to enforceable master netting arrangements that provide for the net settlement of all derivative contracts between the Parent Company or its subsidiaries and the respective counterparty in the event of default or upon the occurrence of certain termination events. Collateral support agreements with the master netting arrangements generally provide that the Company will receive or pledge financial collateral at the first dollar of exposure.

The Company has securities lending agreements with unaffiliated financial institutions that post collateral to the Company in return for the use of its fixed maturity and public equity securities (see Note 3). When the Company has entered into securities lending agreements with the same counterparty, the agreements generally provide for net settlement in the event of default by the counterparty. This right of set-off allows the Company to keep and apply collateral received if the counterparty failed to return the securities borrowed from the Company as contractually agreed.

The tables below summarize the Company's derivatives and securities lending transactions, and as reflected in the tables, in accordance with U.S. GAAP, the Company's policy is to not offset these financial instruments in the consolidated balance sheets.

Offsetting of Financial Assets and Derivative Assets


June 30, 2026
										Gross Amounts Not Offset in Balance Sheet
(In millions)	Gross Amount of Recognized Assets			Gross Amount Offset in Balance Sheet			Net Amount of Assets Presented in Balance Sheet			Financial Instruments			Securities Collateral		Cash Collateral Received			Net Amount
Derivative assets:
Derivative assets subject to a master netting agreement or offsetting arrangement
OTC - bilateral		$	142		$	0		$	142		$	(20)	$	(30)		$	(92)		$	0

Total derivative assets subject to a master netting agreement or offsetting arrangement		142			0			142			(20)		(30)			(92)			0
Derivative assets not subject to a master netting agreement or offsetting arrangement
OTC - bilateral		41						41											41

Total derivative assets not subject to a master netting agreement or offsetting arrangement		41						41											41
Total derivative assets		183			0			183			(20)		(30)			(92)			41
Securities lending and similar arrangements		7,256			0			7,256			0		0			(7,256)			0
Total		$	7,439		$	0		$	7,439		$	(20)	$	(30)		$	(7,348)		$	41


December 31, 2025
										Gross Amounts Not Offset in Balance Sheet
(In millions)	Gross Amount of Recognized Assets			Gross Amount Offset in Balance Sheet			Net Amount of Assets Presented in Balance Sheet			Financial Instruments			Securities Collateral		Cash Collateral Received			Net Amount
Derivative assets:
Derivative assets subject to a master netting agreement or offsetting arrangement
OTC - bilateral		$	122		$	0		$	122		$	(1)	$	(34)		$	(84)		$	3
OTC - cleared		12			0			12			(12)		0			0			0
Total derivative assets subject to a master netting agreement or offsetting arrangement		134			0			134			(13)		(34)			(84)			3
Derivative assets not subject to a master netting agreement or offsetting arrangement
OTC - bilateral		45						45											45

Total derivative assets not subject to a master netting agreement or offsetting arrangement		45						45											45
Total derivative assets		179			0			179			(13)		(34)			(84)			48
Securities lending and similar arrangements		3,945			0			3,945			0		0			(3,945)			0
Total		$	4,124		$	0		$	4,124		$	(13)	$	(34)		$	(4,029)		$	48

Offsetting of Financial Liabilities and Derivative Liabilities


June 30, 2026
										Gross Amounts Not Offset in Balance Sheet
(In millions)	Gross Amount of Recognized Liabilities			Gross Amount Offset in Balance Sheet			Net Amount of Liabilities Presented in Balance Sheet			Financial Instruments			Securities Collateral		Cash Collateral Pledged			Net Amount
Derivative liabilities:
Derivative liabilities subject to a master netting agreement or offsetting arrangement
OTC - bilateral		$	78		$	0		$	78		$	(20)	$	(58)		$	0		$	0
OTC - cleared		107			0			107			0		(22)			(81)			4
Total derivative liabilities subject to a master netting agreement or offsetting arrangement		185			0			185			(20)		(80)			(81)			4
Derivative liabilities not subject to a master netting agreement or offsetting arrangement
OTC - bilateral		887						887											887

Total derivative liabilities not subject to a master netting agreement or offsetting arrangement		887						887											887
Total derivative liabilities		1,072			0			1,072			(20)		(80)			(81)			891
Securities lending and similar arrangements		7,340			0			7,340			(7,256)		0			0			84
Total		$	8,412		$	0		$	8,412		$	(7,276)	$	(80)		$	(81)		$	975


December 31, 2025
										Gross Amounts Not Offset in Balance Sheet
(In millions)	Gross Amount of Recognized Liabilities			Gross Amount Offset in Balance Sheet			Net Amount of Liabilities Presented in Balance Sheet			Financial Instruments			Securities Collateral		Cash Collateral Pledged			Net Amount
Derivative liabilities:
Derivative liabilities subject to a master netting agreement or offsetting arrangement
OTC - bilateral		$	19		$	0		$	19		$	(1)	$	(17)		$	0		$	1
OTC - cleared		188			0			188			(12)		(24)			(151)			1
Total derivative liabilities subject to a master netting agreement or offsetting arrangement		207			0			207			(13)		(41)			(151)			2
Derivative liabilities not subject to a master netting agreement or offsetting arrangement
OTC - bilateral		765						765											765

Total derivative liabilities not subject to a master netting agreement or offsetting arrangement		765						765											765
Total derivative liabilities		972			0			972			(13)		(41)			(151)			767
Securities lending and similar arrangements		3,989			0			3,989			(3,945)		0			0			44
Total		$	4,961		$	0		$	4,961		$	(3,958)	$	(41)		$	(151)		$	811

For additional information on the Company's derivative and other financial instruments, see the accompanying Notes 3 and 5 and Notes 1, 3 and 5 of the Notes to the Consolidated Financial Statements in the 2025 Annual Report.

5. FAIR VALUE MEASUREMENTS

Fair Value Hierarchy

U.S. GAAP specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. These two types of inputs create three valuation hierarchy levels, as follows:

Level 1 valuations reflect quoted market prices for identical assets or liabilities in active markets.
Level 2 valuations reflect quoted market prices for similar assets or liabilities in an active market, quoted market prices for identical or similar assets or liabilities in non-active markets or model-derived valuations in which all significant valuation inputs are observable in active markets.
Level 3 valuations reflect valuations in which one or more of the significant inputs are not observable in an active market.

The following tables present the fair value hierarchy levels of the Company's assets and liabilities that are measured and carried at fair value on a recurring basis.


	June 30, 2026
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Assets:
Securities available-for-sale, carried at fair value:
Fixed maturity securities:
Government and agencies		$	13,011		$	556		$	0		$	13,567
Municipalities		0			1,764			0			1,764
Mortgage- and asset-backed securities		0			2,972			2,753			5,725
Public utilities		0			6,102			852			6,954
Sovereign and supranational		0			357			17			374
Banks/financial institutions		51			9,163			4			9,218
Other corporate		0			25,111			135			25,246
Total fixed maturity securities		13,062			46,025			3,761			62,848
Equity securities		767			0			158			925
Other investments		2,815			0			0			2,815
Cash and cash equivalents		6,120			0			0			6,120
Other assets:
Foreign currency swaps		0			42			0			42
Foreign currency forwards		0			124			0			124
Foreign currency options		0			17			0			17



Total other assets		0			183			0			183
Total assets		$	22,764		$	46,208		$	3,919		$	72,891
Liabilities:
Other liabilities:
Foreign currency swaps		$	0		$	887		$	0		$	887
Foreign currency forwards		0			19			0			19
Foreign currency options		0			59			0			59
Interest rate swaps		0			107			0			107


Total liabilities		$	0		$	1,072		$	0		$	1,072


	December 31, 2025
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Assets:
Securities available-for-sale, carried at fair value:
Fixed maturity securities:
Government and agencies		$	13,921		$	686		$	0		$	14,607
Municipalities		0			1,930			0			1,930
Mortgage- and asset-backed securities		0			2,072			2,294			4,366
Public utilities		0			6,298			876			7,174
Sovereign and supranational		0			383			19			402
Banks/financial institutions		0			9,235			9			9,244
Other corporate		0			26,239			159			26,398
Total fixed maturity securities		13,921			46,843			3,357			64,121
Equity securities		727			0			160			887
Other investments		1,373			0			0			1,373
Cash and cash equivalents		6,245			0			0			6,245
Other assets:
Foreign currency swaps		0			45			0			45
Foreign currency forwards		0			120			0			120

Interest rate swaps		0			14			0			14
Total other assets		0			179			0			179
Total assets		$	22,266		$	47,022		$	3,517		$	72,805
Liabilities:
Other liabilities:
Foreign currency swaps		$	0		$	765		$	0		$	765
Foreign currency forwards		0			18			0			18

Interest rate swaps		0			189			0			189

Total liabilities		$	0		$	972		$	0		$	972

The following tables present the carrying amount and fair value categorized by fair value hierarchy level for the Company's financial instruments that are not carried at fair value.


	June 30, 2026
(In millions)	Carrying Value			Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Assets:
Securities held-to-maturity, carried at amortized cost:
Fixed maturity securities:
Government and agencies		$	14,900		$	13,576		$	120		$	0		$	13,696
Municipalities		225			0			205			0			205

Public utilities		31			0			26			0			26
Sovereign and supranational		334			0			315			0			315

Other corporate		15			0			14			0			14
Commercial mortgage and other loans		9,354			0			0			9,192			9,192
Other investments (1)		39			0			39			0			39
Total assets		$	24,898		$	13,576		$	719		$	9,192		$	23,487
Liabilities:
Other policyholders’ funds		$	5,288		$	0		$	0		$	5,222		$	5,222
Notes payable (excluding leases)		8,643			0			7,396			658			8,054
Total liabilities		$	13,931		$	0		$	7,396		$	5,880		$	13,276

(1) Excludes policy loans of $204, equity method investments of $4,346, and REO of $847, at carrying valu**e


	December 31, 2025
(In millions)	Carrying Value			Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Assets:
Securities held-to-maturity, carried at amortized cost:
Fixed maturity securities:
Government and agencies		$	15,459		$	14,696		$	131		$	0		$	14,827
Municipalities		235			0			229			0			229

Public utilities		32			0			29			0			29
Sovereign and supranational		378			0			375			0			375

Other corporate		16			0			16			0			16
Commercial mortgage and other loans		9,765			0			0			9,617			9,617
Other investments (1)		28			0			28			0			28
Total assets		$	25,913		$	14,696		$	808		$	9,617		$	25,121
Liabilities:
Other policyholders’ funds		$	5,445		$	0		$	0		$	5,376		$	5,376
Notes payable (excluding leases)		8,330			0			7,167			682			7,849
Total liabilities		$	13,775		$	0		$	7,167		$	6,058		$	13,225

(1) Excludes policy loans of $210, equity method investments of $4,109, and REO of $902, at carrying value

Fair Value of Financial Instruments

Fixed maturity and equity securities

The fair values of the Company's public fixed maturity securities are generally based on prices provided by third-party pricing vendors. The Company utilizes internally generated valuations or broker quotes for privately issued fixed maturity securities or fixed maturity securities where there is no price available from a third-party pricing vendor.

The fair values of the Company's public equity securities are generally based on price quotes, including quoted market prices readily available from independent public exchange markets or established security dealer associations. The Company determines the fair values of privately issued equity securities using the following approaches or techniques:

price quotes and valuations from third-party pricing vendors,
in-house valuations, and
non-binding price quotes the Company obtains from outside brokers.

The pricing data and market quotes the Company obtains from outside sources, including third-party pricing services, are reviewed internally for reasonableness. If a fair value appears unreasonable, the Company will re-examine the inputs and assess the reasonableness of the pricing data with the provider. Additionally, the Company may compare the inputs to relevant market indices and other performance measurements. Based on management's analysis, the valuation is confirmed or may be revised if there is evidence of a more appropriate estimate of fair value based on available market data. The Company has performed verification of the inputs and calculations in any valuation models, including independent validations and back testing, to confirm that the valuations represent reasonable estimates of fair value. For the periods presented, the Company has not adjusted the quotes or prices it obtains from the pricing services and brokers it uses.

For internally generated valuations, the Company utilizes valuation models developed by a third-party pricing vendor. The models and associated processes and controls are executed by Company personnel.

These models are discounted cash flow valuation models but also use information from related markets, specifically public bond markets and the credit default swap (CDS) market, to estimate expected cash flows. The models take into consideration any unique characteristics of the securities and make various adjustments to arrive at an appropriate issuer-specific loss adjusted credit curve using the most appropriate comparable security(ies) of the issuer and issuer-specific CDS spreads. This credit curve is then used with the relevant recovery rates to estimate expected cash flows and modeling of additional features, including illiquidity adjustments, if necessary, to price the security by discounting those loss adjusted cash flows. In cases where a credit curve cannot be developed from market information for the specific issuer, the valuation methodology takes into consideration other market observable inputs, including:

the most appropriate comparable security(ies) of a guarantor and/or parent
CDS spreads of a guarantor and/or parent
bonds of comparable issuers with similar characteristics such as rating, geography, or sector
CDS spreads of an appropriate index or of comparable issuers with similar characteristics such as rating, geography, or sector
bond indices that are comparative in rating, industry, maturity, and region.

The following tables present the pricing sources for the fair values of the Company's fixed maturity and equity securities.


	June 30, 2026
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Securities available-for-sale, carried at fair value:
Fixed maturity securities:
Government and agencies:
Third-party pricing vendor		$	13,011		$	367		$	0		$	13,378
Internal		0			189			0			189

Total government and agencies		13,011			556			0			13,567
Municipalities:
Third-party pricing vendor		0			1,616			0			1,616
Internal		0			148			0			148

Total municipalities		0			1,764			0			1,764
Mortgage- and asset-backed securities:
Third-party pricing vendor		0			2,350			0			2,350
Internal		0			622			0			622
Broker/other		0			0			2,753			2,753
Total mortgage- and asset-backed securities		0			2,972			2,753			5,725
Public utilities:
Third-party pricing vendor		0			3,659			0			3,659
Internal		0			2,443			0			2,443
Broker/other		0			0			852			852
Total public utilities		0			6,102			852			6,954
Sovereign and supranational:
Third-party pricing vendor		0			74			0			74
Internal		0			283			0			283
Broker/other		0			0			17			17
Total sovereign and supranational		0			357			17			374
Banks/financial institutions:
Third-party pricing vendor		0			5,801			0			5,801
Internal		51			3,362			0			3,413
Broker/other		0			0			4			4
Total banks/financial institutions		51			9,163			4			9,218
Other corporate:
Third-party pricing vendor		0			20,441			0			20,441
Internal		0			4,670			0			4,670
Broker/other		0			0			135			135
Total other corporate		0			25,111			135			25,246
Total securities available-for-sale		$	13,062		$	46,025		$	3,761		$	62,848
Equity securities, carried at fair value:
Third-party pricing vendor		$	767		$	0		$	0		$	767
Internal		0			0			22			22
Broker/other		0			0			136			136
Total equity securities		$	767		$	0		$	158		$	925


	June 30, 2026
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Securities held-to-maturity, carried at amortized cost:
Fixed maturity securities:
Government and agencies:
Third-party pricing vendor		$	13,576		$	120		$	0		$	13,696

Total government and agencies		13,576			120			0			13,696
Municipalities:
Third-party pricing vendor		0			205			0			205

Total municipalities		0			205			0			205




Public utilities:
Third-party pricing vendor		0			26			0			26


Total public utilities		0			26			0			26
Sovereign and supranational:
Third-party pricing vendor		0			142			0			142
Internal		0			173			0			173

Total sovereign and supranational		0			315			0			315




Other corporate:
Third-party pricing vendor		0			14			0			14


Total other corporate		0			14			0			14
Total securities held-to-maturity		$	13,576		$	680		$	0		$	14,256


	December 31, 2025
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Securities available-for-sale, carried at fair value:
Fixed maturity securities:
Government and agencies:
Third-party pricing vendor		$	13,921		$	383		$	0		$	14,304
Internal		0			303			0			303
Total government and agencies		13,921			686			0			14,607
Municipalities:
Third-party pricing vendor		0			1,706			0			1,706
Internal		0			224			0			224
Total municipalities		0			1,930			0			1,930
Mortgage- and asset-backed securities:
Third-party pricing vendor		0			1,824			0			1,824
Internal		0			248			0			248
Broker/other		0			0			2,294			2,294
Total mortgage- and asset-backed securities		0			2,072			2,294			4,366
Public utilities:
Third-party pricing vendor		0			3,660			0			3,660
Internal		0			2,638			0			2,638
Broker/other		0			0			876			876
Total public utilities		0			6,298			876			7,174
Sovereign and supranational:
Third-party pricing vendor		0			79			0			79
Internal		0			304			0			304
Broker/other		0			0			19			19
Total sovereign and supranational		0			383			19			402
Banks/financial institutions:
Third-party pricing vendor		0			5,605			0			5,605
Internal		0			3,630			5			3,635
Broker/other		0			0			4			4
Total banks/financial institutions		0			9,235			9			9,244
Other corporate:
Third-party pricing vendor		0			21,294			0			21,294
Internal		0			4,945			20			4,965
Broker/other		0			0			139			139
Total other corporate		0			26,239			159			26,398
Total securities available-for-sale		$	13,921		$	46,843		$	3,357		$	64,121
Equity securities, carried at fair value:
Third-party pricing vendor		$	727		$	0		$	0		$	727
Internal		0			0			24			24
Broker/other		0			0			136			136
Total equity securities		$	727		$	0		$	160		$	887


	December 31, 2025
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Fair Value
Securities held-to-maturity, carried at amortized cost:
Fixed maturity securities:
Government and agencies:
Third-party pricing vendor		$	14,696		$	131		$	0		$	14,827
Total government and agencies		14,696			131			0			14,827
Municipalities:
Third-party pricing vendor		0			229			0			229
Total municipalities		0			229			0			229




Public utilities:
Third-party pricing vendor		0			29			0			29
Total public utilities		0			29			0			29
Sovereign and supranational:
Third-party pricing vendor		0			188			0			188
Internal		0			187			0			187

Total sovereign and supranational		0			375			0			375



Other corporate:
Third-party pricing vendor		0			16			0			16

Total other corporate		0			16			0			16
Total securities held-to-maturity		$	14,696		$	780		$	0		$	15,476

The following is a discussion of the determination of fair value of the Company's remaining financial instruments.

Derivatives

The Company uses derivative instruments to manage the risk associated with certain assets. However, the derivative instrument may not be classified in the same fair value hierarchy level as the associated asset. The significant inputs to pricing derivatives are generally observable in the market or can be derived from observable market data. When these inputs are observable, the derivatives are classified as Level 2.

The Company uses present value techniques to value non-option based derivatives. It also uses option pricing models to value option based derivatives. Key inputs are as follows:


Instrument Type						Level 2
Interest rate derivatives						Swap yield curves Basis curves Interest rate volatility (1)
Foreign exchange rate derivatives - Non-VIEs (forwards, swaps and options)						Foreign currency forward rates Swap yield curves Basis curves Foreign currency spot rates Foreign cross-currency basis curves Foreign currency volatility (1)
Foreign exchange rate derivatives - VIEs (swaps)						Foreign currency spot rates Swap yield curves Credit default swap curves Basis curves Recovery rates Foreign currency forward rates Foreign cross-currency basis curves

(1) Option-based only

The fair values of the foreign currency forwards and options are based on observable market inputs; therefore, they are classified as Level 2.

To determine the fair value of its interest rate derivatives, the Company uses inputs that are generally observable in the market or can be derived from observable market data. Interest rate swaps are cleared trades. In a cleared swap contract, the clearinghouse provides benefits to the counterparties similar to contracts listed for investment traded on an exchange since it maintains a daily margin to mitigate counterparties' credit risk. These derivatives are priced using observable inputs; accordingly, they are classified as Level 2.

For derivatives associated with VIEs where the Company is the primary beneficiary, the Company is not the direct counterparty to the swap contracts. Nevertheless, the Company has full transparency into the contracts to properly value the swaps for reporting purposes. For these derivatives, the Company utilizes valuation models developed by independent valuation analytics providers. The models are market standard discounted cash flow models and all associated processes and controls are executed by Company personnel. These models take into consideration any unique characteristics of the derivatives in determining the appropriate valuation methodology to estimate expected cash flows. The fair values of these swaps are based on observable market inputs and are classified as Level 2 within the fair value hierarchy.

For forward bond purchase commitments, the fair value of the derivative is based on the difference in the fixed purchase price and the current market value of the related bond prior to the settlement date. Since the bond is typically a public bond with readily available pricing, the derivatives associated with the forward purchase commitment are classified as Level 2 within the fair value hierarchy.

Commercial mortgage and other loans

Commercial mortgage and other loans include TREs, CMLs, MMLs and other loans. The Company's loan receivables do not have readily determinable market prices and generally lack market liquidity. Fair values for loan receivables are determined based on the present value of expected future cash flows discounted at the applicable U.S. Treasury or floating-rate benchmark yield plus an appropriate spread that considers other risk factors, such as credit and liquidity risk. The spreads are a significant component of the pricing inputs and are generally considered unobservable. Therefore, these investments are classified as Level 3 within the fair value hierarchy.

Other investments

Other investments includes short-term investments that are measured at fair value where amortized cost approximates fair value.

Other policyholders' funds

The largest component of the other policyholders' funds liability is the Company's annuity line of business in Aflac Japan. The Company's annuities have fixed benefits and premiums. For this product, the Company estimates the fair value to be equal to the cash surrender value. This is analogous to the value paid to policyholders on the valuation date if they were to surrender their policy. The Company periodically checks the cash value against discounted cash flow projections for reasonableness. The Company considers its inputs for this valuation to be unobservable and have accordingly classified this valuation as Level 3.

Notes payable

The fair values of the Company's publicly issued notes payable are determined by utilizing available sources of observable inputs from third-party pricing vendors and are classified as Level 2. The Company's private placement notes payable are valued using the same internal models that the Company uses for its Japanese yen-denominated and U.S. dollar-denominated private placement investment portfolio. The fair values for these private placements are deemed Level 2 valuations, as they are model-derived valuations that are generated internally with all significant valuation inputs being observed in active markets. The fair values of the Company's Japanese yen-denominated loans approximate their carrying values and are classified as Level 3.

Transfers between Hierarchy Levels and Level 3 Rollforward

Assets and liabilities are transferred into Level 3 when a significant input cannot be corroborated with market observable data. This occurs when market activity decreases significantly and underlying inputs cannot be observed, current prices are not available, and/or when there are significant variances in quoted prices, thereby affecting transparency. Assets and liabilities are transferred out of Level 3 when circumstances change such that a significant input can be corroborated with market observable data. This may be due to a significant increase in market activity, a specific event, or one or more significant input(s) becoming observable.

The following tables present the changes in fair value of the Company's investments carried at fair value classified as Level 3.


Three Months Ended June 30, 2026
	Fixed Maturity Securities										Equity Securities
(In millions)	Mortgage- and Asset- Backed Securities		Public Utilities		Sovereign and Supranational		Banks/ Financial Institutions		Other Corporate				Total
Balance, beginning of period	$	2,655	$	825	$	19	$	4	$	135	$	159	$	3,797
Net investment gains (losses) included in earnings	12		1		0		0		0		(1)		12
Unrealized gains (losses) included in other comprehensive income (loss)	(16)		(1)		0		0		0		0		(17)
Purchases, issuances, sales and settlements:
Purchases	189		39		0		0		0		0		228
Issuances	0		0		0		0		0		0		0
Sales	0		0		0		0		0		0		0
Settlements	(141)		(12)		(2)		0		0		0		(155)
Transfers into Level 3	140		0		0		0		0		0		140
Transfers out of Level 3	(86)		0		0		0		0		0		(86)
Balance, end of period	$	2,753	$	852	$	17	$	4	$	135	$	158	$	3,919
Changes in unrealized gains (losses) relating to Level 3 assets and liabilities still held at the end of the period included in earnings	$	1	$	1	$	0	$	0	$	0	$	2	$	4


Three Months Ended June 30, 2025
	Fixed Maturity Securities										Equity Securities
(In millions)	Mortgage- and Asset- Backed Securities		Public Utilities		Sovereign and Supranational		Banks/ Financial Institutions		Other Corporate				Total
Balance, beginning of period	$	1,603	$	756	$	24	$	10	$	137	$	160	$	2,690
Net investment gains (losses) included in earnings	0		0		0		0		0		3		3
Unrealized gains (losses) included in other comprehensive income (loss)	20		14		1		(1)		2		0		36
Purchases, issuances, sales and settlements:
Purchases	175		48		0		0		24		4		251
Issuances	0		0		0		0		0		0		0
Sales	0		0		0		0		0		0		0
Settlements	(44)		(26)		(2)		0		0		0		(72)
Transfers into Level 3	168		0		0		0		0		0		168
Transfers out of Level 3	0		0		0		0		0		0		0
Balance, end of period	$	1,922	$	792	$	23	$	9	$	163	$	167	$	3,076
Changes in unrealized gains (losses) relating to Level 3 assets and liabilities still held at the end of the period included in earnings	$	0	$	0	$	0	$	0	$	0	$	3	$	3


Six Months Ended June 30, 2026
	Fixed Maturity Securities										Equity Securities
(In millions)	Mortgage- and Asset- Backed Securities		Public Utilities		Sovereign and Supranational		Banks/ Financial Institutions		Other Corporate				Total
Balance, beginning of period	$	2,294	$	876	$	19	$	9	$	159	$	160	$	3,517
Net investment gains (losses) included in earnings	14		5		0		0		6		(3)		22
Unrealized gains (losses) included in other comprehensive income (loss)	(48)		(24)		0		0		(8)		0		(80)
Purchases, issuances, sales and settlements:
Purchases	491		49		0		0		0		1		541
Issuances	0		0		0		0		0		0		0
Sales	0		0		0		0		0		0		0
Settlements	(171)		(54)		(2)		0		(22)		0		(249)
Transfers into Level 3	259		0		0		0		0		0		259
Transfers out of Level 3	(86)		0		0		(5)		0		0		(91)
Balance, end of period	$	2,753	$	852	$	17	$	4	$	135	$	158	$	3,919
Changes in unrealized gains (losses) relating to Level 3 assets and liabilities still held at the end of the period included in earnings	$	2	$	1	$	0	$	0	$	0	$	1	$	4


Six Months Ended June 30, 2025
	Fixed Maturity Securities										Equity Securities
(In millions)	Mortgage- and Asset- Backed Securities		Public Utilities		Sovereign and Supranational		Banks/ Financial Institutions		Other Corporate				Total
Balance, beginning of period	$	1,156	$	647	$	23	$	10	$	231	$	157	$	2,224
Net investment gains (losses) included in earnings	0		0		0		0		0		4		4
Unrealized gains (losses) included in other comprehensive income (loss)	30		20		2		(1)		4		0		55
Purchases, issuances, sales and settlements:
Purchases	609		158		0		0		24		7		798
Issuances	0		0		0		0		0		0		0
Sales	0		0		0		0		0		(1)		(1)
Settlements	(56)		(33)		(2)		0		(1)		0		(92)
Transfers into Level 3	183		0		0		0		0		0		183
Transfers out of Level 3	0		0		0		0		(95)		0		(95)
Balance, end of period	$	1,922	$	792	$	23	$	9	$	163	$	167	$	3,076
Changes in unrealized gains (losses) relating to Level 3 assets and liabilities still held at the end of the period included in earnings	$	0	$	0	$	0	$	0	$	0	$	4	$	4

Fair Value Sensitivity

Level 3 Significant Unobservable Input Sensitivity

The following tables summarize the significant unobservable inputs used in the valuation of the Company's Level 3 investments carried at fair value. Included in the tables are the inputs or range of possible inputs that have an effect on the overall valuation of the financial instruments.


June 30, 2026
(In millions)	Fair Value			Valuation Technique(s)	Unobservable Input	Range				Weighted Average
Assets:
Securities available-for-sale, carried at fair value:
Fixed maturity securities:
Mortgage- and asset-backed securities		$	2,753	Consensus pricing	Offered quotes	86.79	-	104.56	(a)	99.31
Public utilities		852		Discounted cash flow	Credit spreads	100 bps	-	467 bps	(c)	184 bps
Sovereign and supranational		17		Consensus pricing	Offered quotes	N/A			(b)	N/A
Banks/financial institutions		4		Adjusted cost	Private financials	N/A			(d)	N/A
Other corporate		135		Discounted cash flow	Credit spreads	75 bps	-	380 bps	(c)	205 bps
Equity securities		158		Adjusted cost	Private financials	N/A			(d)	N/A
Total assets		$	3,919

(a) Represents prices for securities where the Company receives unadjusted broker quotes and for which there is no transparency into the providers' valuation techniques

(b) Category represents a single security; range not applicable

(c) Actual or equivalent credit spreads in basis points

(d) Prices do not utilize credit spreads; therefore, range is not applicable


December 31, 2025
(In millions)	Fair Value			Valuation Technique(s)	Unobservable Input	Range				Weighted Average
Assets:
Securities available-for-sale, carried at fair value:
Fixed maturity securities:
Mortgage- and asset-backed securities		$	2,294	Consensus pricing	Offered quotes	88.75	-	106.70	(a)	100.42
Public utilities		876		Discounted cash flow	Credit spreads	100 bps	-	391 bps	(c)	163 bps
Sovereign and supranational		19		Consensus pricing	Offered quotes	N/A			(b)	N/A
Banks/financial institutions		9		Adjusted cost	Private financials	N/A			(d)	N/A
Other corporate		159		Discounted cash flow	Credit spreads	75 bps	-	384 bps	(c)	217 bps
Equity securities		160		Adjusted cost	Private financials	N/A			(d)	N/A
Total assets		$	3,517

(a) Represents prices for securities where the Company receives unadjusted broker quotes and for which there is no transparency into the providers' valuation techniques

(b) Category represents a single security; range not applicable

(c) Actual or equivalent credit spreads in basis points

(d) Prices do not utilize credit spreads; therefore, range is not applicable

The following is a discussion of the significant unobservable inputs or valuation techniques used in determining the fair value of securities classified as Level 3.

Credit Spreads

The Company holds certain assets that are of a unique, specialized, and/or securitized nature that do not trade on a regular basis in an active market, which makes their fair values difficult to estimate. Most of these assets are managed by external asset managers and the Company utilizes these managers for their expertise when evaluating various inputs used to determine the fair values for these assets, including identifying the appropriate credit or risk spread over risk-free interest rates that incorporates the unique nature or structure of the asset in the valuations. For those assets of a similar nature but not managed by external asset managers, the Company internally estimates the spreads and risk adjustments over risk-free interest rates that reflect the unique nature or structure of the asset as well as the current pricing environment and market conditions for comparable or related investments. Credit or risk spreads are an important input needed to complete the discounted cash flow analyses used to estimate an investment’s fair value. Credit or risk spreads underlying these fair values are a significant, unobservable input whose derivation is based on the Company’s evaluation of a combination of the external manager’s expertise and knowledge, the current pricing environment, and market conditions for the specific asset.

Offered Quotes

In circumstances where the Company's valuation model price is overridden because it implies a value that is not consistent with current market conditions, the Company will solicit bids from a limited number of brokers. The Company also receives unadjusted prices from brokers for certain of its mortgage and asset-backed securities. These quotes are non-binding but are reflective of valuation best estimates at that particular point in time. Offered quotes are an unobservable input in the determination of fair value of mortgage- and asset-backed securities, certain banks/financial institutions, certain other corporate, and equity securities investments.

Private Financials

The Company invests in the debt and equity securities of private companies operating in the cancer, healthtech, insurtech, finance, internet of things, big data and analytics sectors. Due to their private and often small, startup nature, these companies rely on capital provided by institutional and private equity investors for their ongoing operations. They do not have public securities that trade on a regular basis in an active market, which makes their fair values difficult to estimate. The Company values these investments on a cost basis with appropriate adjustments made based on monitoring private financial information provided by these companies. Adjustments to valuations are generally made as new funding tranches are executed or if the financial information provided significantly changes indicating the need for impairment. This private financial information is unobservable and is a significant determinant in the fair value of these corporate venture investments.

For additional information on the Company's investments and financial instruments, see the accompanying Notes 3 and 4 and Notes 1, 3 and 4 of the Notes to the Consolidated Financial Statements in the 2025 Annual Report.

6. DEFERRED POLICY ACQUISITION COSTS

The following tables present a rollforward of deferred policy acquisition costs by reporting segment and disaggregated by product type.


	June 30, 2026
	Aflac Japan								Aflac U.S.
(In millions)	Cancer		Medical and Other Health		Life Insurance		Other		Accident		Disability		Critical Care		Hospital Indemnity		Dental/ Vision		Life Insurance		Other		Total
Deferred policy acquisition costs:
Balance at December 31, 2025	$	2,965	$	1,840	$	446	$	51	$	909	$	641	$	1,355	$	463	$	87	$	277	$	0	$	9,034
Capitalization	168		49		23		1		64		58		75		40		6		62		0		546
Amortization expense	(91)		(45)		(16)		(2)		(73)		(61)		(81)		(40)		(6)		(24)		0		(439)

Foreign currency translation and other	(109)		(67)		(16)		(1)		0		0		0		0		0		0		0		(193)
Balance at June 30, 2026	$	2,933	$	1,777	$	437	$	49	$	900	$	638	$	1,349	$	463	$	87	$	315	$	0	$	8,948


	December 31, 2025
	Aflac Japan								Aflac U.S.
(In millions)	Cancer		Medical and Other Health		Life Insurance		Other		Accident		Disability		Critical Care		Hospital Indemnity		Dental/ Vision		Life Insurance		Other		Total
Deferred policy acquisition costs:
Balance at December 31, 2024	$	2,776	$	1,833	$	441	$	52	$	915	$	636	$	1,348	$	452	$	86	$	219	$	0	$	8,758
Capitalization	357		85		33		3		137		127		162		90		13		98		0		1,105
Amortization expense	(188)		(99)		(33)		(3)		(143)		(122)		(155)		(79)		(12)		(40)		0		(874)

Foreign currency translation and other	20		21		5		(1)		0		0		0		0		0		0		0		45
Balance at December 31, 2025	$	2,965	$	1,840	$	446	$	51	$	909	$	641	$	1,355	$	463	$	87	$	277	$	0	$	9,034

There were no changes to the inputs, judgments, assumptions or methods used to determine amortization amounts during the six-month periods ended June 30, 2026 and 2025. For additional information on deferred policy acquisition costs, see Notes 1 and 6 of the Notes to the Consolidated Financial Statements in the 2025 Annual Report.

7. POLICY LIABILITIES

Future Policy Benefits

The following tables present the changes in the present value of expected future net premiums and the present value of expected future policy benefits by reporting segment and disaggregated by product type. The present value of expected future net premiums and the present value of expected future policy benefits are presented gross of internal and external ceded reinsurance.


	June 30, 2026
	Aflac Japan								Aflac U.S.
(In millions)	Cancer		Medical and Other Health		Life Insurance		Other		Accident		Disability		Critical Care		Hospital Indemnity		Dental/ Vision		Life Insurance		Other
Present value of expected future net premiums:
Balance at December 31, 2025	$	12,207	$	10,349	$	4,547	$	725	$	2,525	$	1,685	$	3,945	$	1,171	$	202	$	1,021	$	1,968
Beginning balance at original discount rate	13,201		11,511		4,772		800		2,637		1,726		4,242		1,231		208		1,051		1,835
Effect of changes in cash flow assumptions	0		0		0		0		0		0		0		0		0		0		0
Effect of actual variances from expected experience	(247)		(161)		(38)		(6)		(16)		12		(28)		(6)		(4)		(29)		(55)
Adjusted beginning of period balance	12,954		11,350		4,734		794		2,621		1,738		4,214		1,225		204		1,022		1,780
Issuances	419		165		164		1		169		177		286		130		22		176		588
Interest accrual	171		134		53		7		55		36		89		26		5		23		61
Net premiums collected (1)	(624)		(487)		(353)		(43)		(241)		(202)		(294)		(128)		(19)		(90)		(112)
Foreign currency translation	(467)		(403)		(165)		(27)		0		0		0		0		0		0		0
Other	0		(1)		0		0		(2)		(2)		(2)		(1)		0		(3)		(1)
Ending balance at original discount rate	12,453		10,758		4,433		732		2,602		1,747		4,293		1,252		212		1,128		2,316
Effect of changes in discount rate assumptions	(1,467)		(1,577)		(350)		(96)		(147)		(64)		(352)		(74)		(9)		(40)		171
Balance at June 30, 2026	$	10,986	$	9,181	$	4,083	$	636	$	2,455	$	1,683	$	3,941	$	1,178	$	203	$	1,088	$	2,487
Present value of expected future policy benefits:
Balance at December 31, 2025	$	34,987	$	17,692	$	20,894	$	3,671	$	3,184	$	2,336	$	10,845	$	1,955	$	438	$	2,076	$	2,444
Beginning balance at original discount rate	36,438		21,979		25,716		4,758		3,348		2,401		11,812		2,071		458		2,288		2,304
Effect of changes in cash flow assumptions	0		0		0		0		0		0		0		0		0		0		0
Effect of actual variances from expected experience	(277)		(187)		(46)		(13)		(40)		9		(46)		(12)		(4)		(39)		(48)
Adjusted beginning of period balance	36,161		21,792		25,670		4,745		3,308		2,410		11,766		2,059		454		2,249		2,256
Issuances	428		169		169		3		174		186		300		136		24		182		595
Interest accrual	602		265		265		43		69		50		256		44		10		48		73
Benefit payments	(1,264)		(485)		(1,080)		(108)		(251)		(238)		(489)		(159)		(30)		(57)		(133)
Foreign currency translation	(1,293)		(782)		(903)		(168)		0		0		0		0		0		0		0
Other	0		0		0		0		0		0		0		0		0		0		0
Ending balance at original discount rate	34,634		20,959		24,121		4,515		3,300		2,408		11,833		2,080		458		2,422		2,791
Effect of changes in discount rate assumptions	(3,323)		(5,274)		(5,681)		(1,254)		(210)		(98)		(1,146)		(144)		(27)		(243)		167
Balance at June 30, 2026	31,311		15,685		18,440		3,261		3,090		2,310		10,687		1,936		431		2,179		2,958
Net liability for future policy benefits	20,325		6,504		14,357		2,625		635		627		6,746		758		228		1,091		471
Less: reinsurance recoverable	3,920		933		303		0		0		0		0		0		0		29		17
Net liability for future policy benefits after reinsurance recoverable	$	16,405	$	5,571	$	14,054	$	2,625	$	635	$	627	$	6,746	$	758	$	228	$	1,062	$	454

(1) Net premiums collected represent the portion of gross premiums collected from policyholders that is used to fund expected future benefit payments.


	December 31, 2025
	Aflac Japan								Aflac U.S.
(In millions)	Cancer		Medical and Other Health		Life Insurance		Other		Accident		Disability		Critical Care		Hospital Indemnity		Dental/ Vision		Life Insurance		Other
Present value of expected future net premiums:
Balance at December 31, 2024	$	14,184	$	11,817	$	5,156	$	846	$	2,497	$	1,635	$	3,901	$	1,122	$	196	$	909	$	826
Beginning balance at original discount rate	14,008		11,845		5,084		864		2,687		1,726		4,340		1,221		209		976		824
Effect of changes in cash flow assumptions	(661)		136		(40)		5		18		(22)		(163)		(8)		(10)		(5)		386
Effect of actual variances from expected experience	(436)		(84)		(62)		(12)		21		20		(2)		16		(10)		(32)		146
Adjusted beginning of period balance	12,911		11,897		4,982		857		2,726		1,724		4,175		1,229		189		939		1,356
Issuances	1,114		253		405		9		295		341		488		211		50		246		571
Interest accrual	364		292		110		16		110		69		177		50		9		42		73
Net premiums collected (1)	(1,379)		(1,076)		(795)		(95)		(487)		(402)		(590)		(255)		(39)		(171)		(138)
Foreign currency translation	193		146		70		13		0		0		0		0		0		0		0
Other	(2)		(1)		0		0		(7)		(6)		(8)		(4)		(1)		(5)		(27)
Ending balance at original discount rate	13,201		11,511		4,772		800		2,637		1,726		4,242		1,231		208		1,051		1,835
Effect of changes in discount rate assumptions	(994)		(1,162)		(225)		(75)		(112)		(41)		(297)		(60)		(6)		(30)		133
Balance at December 31, 2025	$	12,207	$	10,349	$	4,547	$	725	$	2,525	$	1,685	$	3,945	$	1,171	$	202	$	1,021	$	1,968
Present value of expected future policy benefits:
Balance at December 31, 2024	$	40,781	$	20,606	$	24,265	$	4,225	$	3,127	$	2,330	$	10,701	$	1,897	$	441	$	1,847	$	1,288
Beginning balance at original discount rate	37,856		21,957		26,330		4,765		3,386		2,466		12,013		2,073		477		2,126		1,293
Effect of changes in cash flow assumptions	(1,130)		108		(101)		74		47		(46)		(219)		(4)		(15)		(17)		399
Effect of actual variances from expected experience	(483)		(102)		(61)		(21)		9		5		(15)		8		(13)		(53)		148
Adjusted beginning of period balance	36,243		21,963		26,168		4,818		3,442		2,425		11,779		2,077		449		2,056		1,840
Issuances	1,138		260		417		14		300		355		503		217		50		254		574
Interest accrual	1,299		564		569		91		138		99		515		87		20		87		97
Benefit payments	(2,723)		(1,044)		(1,753)		(218)		(532)		(478)		(985)		(310)		(61)		(109)		(207)
Foreign currency translation	481		236		315		53		0		0		0		0		0		0		0
Other	0		0		0		0		0		0		0		0		0		0		0
Ending balance at original discount rate	36,438		21,979		25,716		4,758		3,348		2,401		11,812		2,071		458		2,288		2,304
Effect of changes in discount rate assumptions	(1,451)		(4,287)		(4,822)		(1,087)		(164)		(65)		(967)		(116)		(20)		(212)		140
Balance at December 31, 2025	34,987		17,692		20,894		3,671		3,184		2,336		10,845		1,955		438		2,076		2,444
Net liability for future policy benefits	22,780		7,343		16,347		2,946		659		651		6,900		784		236		1,055		476
Less: reinsurance recoverable	4,406		1,062		0		0		0		0		0		0		0		25		11
Net liability for future policy benefits after reinsurance recoverable	$	18,374	$	6,281	$	16,347	$	2,946	$	659	$	651	$	6,900	$	784	$	236	$	1,030	$	465

(1) Net premiums collected represent the portion of gross premiums collected from policyholders that is used to fund expected future benefit payments.

The following tables present the weighted-average interest rates and weighted-average liability duration (calculated using the original discount rate) by reporting segment and disaggregated by product type.


	June 30, 2026
	Aflac Japan				Aflac U.S.
	Cancer	Medical and Other Health	Life Insurance	Other	Accident	Disability	Critical Care	Hospital Indemnity	Dental/ Vision	Life Insurance	Other
Weighted-average interest, original discount rate (1)	3.8 %	2.5 %	2.1 %	1.8 %	4.1 %	4.4 %	4.5 %	4.5 %	4.4 %	4.0 %	5.5 %
Weighted-average interest, current discount rate (1)	4.0 %	4.5 %	3.6 %	4.3 %	5.4 %	5.2 %	5.5 %	5.5 %	5.4 %	5.5 %	5.6 %
Weighted-average liability duration (years)	12.2	22.7	16.3	15.9	7.9	5.5	10.7	9.0	7.4	13.6	8.2

(1) The weighted-average interest rates are calculated using the reserve balances as the weights. No adjustments were made to observable market information.


	December 31, 2025
	Aflac Japan				Aflac U.S.
	Cancer	Medical and Other Health	Life Insurance	Other	Accident	Disability	Critical Care	Hospital Indemnity	Dental/ Vision	Life Insurance	Other
Weighted-average interest, original discount rate (1)	3.8 %	2.5 %	2.1 %	1.8 %	4.1 %	4.4 %	4.5 %	4.5 %	4.3 %	3.9 %	5.5 %
Weighted-average interest, current discount rate (1)	3.1 %	3.6 %	2.8 %	3.4 %	5.2 %	5.0 %	5.4 %	5.3 %	5.2 %	5.3 %	5.4 %
Weighted-average liability duration (years)	12.3	22.9	16.2	16.2	7.8	5.6	10.8	9.0	7.5	13.5	8.6

(1) The weighted-average interest rates are calculated using the reserve balances as the weights. No adjustments were made to observable market information.

The following table presents a reconciliation of the disaggregated rollforwards above to the ending liability for future policy benefits presented in the consolidated balance sheets. The deferred profit liability for limited-payment contracts and the deferred reinsurance gain liability are presented together with the liability for future policy benefits in the consolidated balance sheets and have been included as reconciling items in the table below.


(In millions)	June 30, 2026			December 31, 2025
Balances included in future policy benefits rollforward:
Aflac Japan
Cancer		$	20,325		$	22,780
Medical and other health		6,504			7,343
Life insurance		14,357			16,347
Other		2,625			2,946
Aflac U.S.
Accident		635			659
Disability		627			651
Critical care		6,746			6,900
Hospital indemnity		758			784
Dental/vision		228			236
Life insurance		1,091			1,055
Other		471			476
Corporate and other		4,339			4,317
Deferred profit liability		2,065			2,066
Deferred reinsurance gain liability		860			757
Intercompany eliminations (1)		(4,450)			(4,997)
Total		$	57,181		$	62,320

(1) Elimination entry necessary due to the internal reinsurance transactions with Aflac Re and to recapture a portion of policy liabilities ceded externally as a result of the reinsurance retrocession transaction. See Note 8 of the Notes to the Consolidated Financial Statements in the 2025 Annual Report.

There were no changes to the inputs, judgments, assumptions or methods used in measuring the liability for future policy benefits during the six-month periods ended June 30, 2026 and 2025.

Discount Rate Methodology

The Company's discount rate methodology involves constructing a current discount rate curve separately for discounting cash flows used to calculate the Japan and U.S. LFPB, reflective of the characteristics of the insurance liabilities, such as currency and tenor. Discount rates are updated each reporting period and require estimation techniques (e.g., interpolation, extrapolation) for determination of points on the curve for which there is limited or no observable market data.

Discount rates are determined using upper-medium grade (low credit risk) fixed-income instrument yields that reflect the duration characteristics of the liability. Locked-in discount rates are determined separately for each issue-year cohort as a single discount rate, calculated as the weighted-average of monthly upper-medium grade (low credit risk) fixed-income instrument forward curves in the calendar year, where the weights are the annualized premiums issued for each month of the cohort. The single discount rate for each issue-year cohort is determined by solving for a rate that produces an equivalent net premium ratio (NPR) to the forward curve and will remain unchanged after the calendar year of issue.

In the Aflac Japan segment, all long-duration insurance policies are denominated in Japanese yen. A significant portion of policies are characterized by tenors exceeding the availability of liquid market data in Japan for single-A rated (as a proxy for upper-medium grade) corporate Japanese yen-denominated debt. The discount rate curve is designed to prioritize the observable inputs where available, while past the last liquid point, the data is derived based on estimation techniques consistent with the fair value guidance in ASC 820. The Aflac Japan segment's curve utilizes liquid market indices tracking publicly traded Japanese yen-denominated single-A corporate debt for the initial 10-year tenor. For the bonds within these market indices where only local ratings are available, the Company prioritizes the bonds with local ratings that are equivalent to a single-A rating based on international rating standards.

For the discount rates applicable to tenors for which the Japan single-A debt market is not liquid but there is sufficient observable market data and/or the observable market data is available for similar instruments (between 10 and 30 years), the Company estimates tenor-specific single-A credit spreads and applies them to risk-free government rates. Lastly, for the tenors where there is limited or no observable single-A or similar market data or risk-free government rates (beyond 30 years), the discount curve is derived by extrapolation of risk-free rates beyond their last liquid point following the Smith-Wilson method and grading of the estimated forward credit spread anchored by the ultimate forward rate. The ultimate forward rate is based on the economic value-based solvency regime, which is consistent with the International Association of Insurance Supervisors (IAIS) Insurance Capital Standards (ICS), and is adjusted for credit and inflation components.

For the Aflac U.S. segment where all long-duration insurance policies are denominated in U.S. dollars and substantially all have cash flow duration within 30 years, for which the U.S. upper-medium grade fixed-income market is liquid and observable, the Company uses data from a liquid fixed-income market index tracking single-A U.S. corporate debt. For the insignificant portion of the policies with cash flow tenors exceeding 30 years, the discount curve beyond that tenor is extrapolated following the Smith-Wilson method from year 30 to the same ultimate forward rate calculated for the Japan discount curve at year 60 and held constant thereafter. The use of the same ultimate rate for U.S. and Japan segments is based on the assumption of long-term global economic convergence.

There were no changes to the methods used to determine the discount rates during the six-month periods ended June 30, 2026 and 2025.

Cash Flow Assumptions

Cash flow assumptions include (1) mortality, (2) morbidity and (3) termination or lapses.

Mortality rate assumptions are based on industry tables and adjusted for the Company's actual or expected experience. These assumptions typically vary by age, gender, and other demographic characteristics such as smoking status.

Morbidity assumptions are based on the Company's internal data and consider emerging experience. These assumptions are reflective of the coverage and benefits provided and generally vary by age, gender, duration, and any other material policyholder characteristics. In cases where a calendar-year trend is significant, future cash flow projections may include a trend adjustment.

In Japan, separate lapse assumptions are set based on actual or expected experience. These lapse and total termination rate assumptions vary by line of business and with policyholder characteristics such as duration. In the U.S., the majority of the future cash flows are modeled using total termination rates (which include both lapse and mortality) and are adjusted for actual experience. Policy provisions, such as reaching premium paid-up status, are taken into account when setting assumptions.

The Company evaluates actual experience compared with expected experience for cash flow assumptions each quarter.

For the three- and six-month periods ended June 30, 2026 and 2025, the variance of actual experience from expected experience was primarily due to favorable variances in morbidity assumptions as compared to actual experience.

The Company performs a more detailed annual review of its assumptions annually during the third quarter.

In 2025, the Company's annual assumption review process resulted in favorable changes largely due to favorable morbidity assumptions in Japan and favorable morbidity and termination assumptions in the U.S.

Favorable morbidity experience has been reflected in the annual assumptions primarily due to lower utilization of certain cancer benefits, including reduced hospitalizations and fewer first-occurrence claims influenced by COVID-19-related behavioral changes. While recognizing ongoing uncertainty, management has reviewed these trends and incorporated elements of the observed experience into its assumptions where considered appropriate.

The following table summarizes the amount of net earned premiums recognized in the consolidated statements of earnings by reporting segment and disaggregated by product type.


	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2026		2025		2026		2025
Net earned premiums:
Aflac Japan
Cancer	$	796	$	885	$	1,612	$	1,724
Medical and other health	474		557		969		1,086
Life insurance	292		328		590		644
Other	28		33		57		65
Aflac U.S.
Accident	303		309		608		620
Disability	372		354		746		706
Critical care	441		443		885		884
Hospital indemnity	182		183		365		367
Dental/vision	56		52		114		101
Life insurance	196		170		394		339
Other	72		41		135		90
Corporate and other	176		206		358		404
Reinsurance ceded	(136)		(91)		(271)		(179)
Total	$	3,252	$	3,470	$	6,562	$	6,851

The following table summarizes the amount of interest expense related to insurance contracts recognized in benefits and claims, excluding reserve remeasurement in the consolidated statements of earnings by reporting segment and disaggregated by product type.


	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2026		2025		2026		2025
Interest expense:
Aflac Japan
Cancer	$	214	$	241	$	431	$	474
Medical and other health	65		69		131		135
Life insurance	104		116		212		230
Other	18		20		36		38
Aflac U.S.
Accident	7		6		14		13
Disability	7		8		14		15
Critical care	84		85		167		170
Hospital indemnity	8		10		18		19
Dental/vision	2		3		5		6
Life insurance	13		12		25		23
Other	6		6		12		12

Total	$	528	$	576	$	1,065	$	1,135

The following tables present the amount of expected future gross premiums and expected future policy benefits and expenses (undiscounted and discounted at the current period discount rate) by reporting segment and disaggregated by product type. These tables are presented gross of internal and external ceded reinsurance.

Future gross premiums represent the expected amount of future premiums to be received. For limited-payment policies, the premiums are collected over a shorter period than the policy term over which benefits are provided. As a result, once the policy reaches premium paid-up status, the future gross premiums can be significantly less than the future benefit payments. Further, benefits and expenses are generally greater in the later years of a policy. These are the primary factors that result in future gross premiums lower than future benefit and expense payments for certain lines of business of the Company.


	June 30, 2026						December 31, 2025
(In millions)	Gross Premiums			Benefits and Expenses			Gross Premiums			Benefits and Expenses
Undiscounted expected future gross premiums and expected future policy benefits and expenses:
Aflac Japan
Cancer		$	49,894		$	52,168		$	52,505		$	54,844
Medical and other health		30,305			33,101			32,757			35,043
Life insurance		10,216			35,461			10,781			37,340
Other		1,245			6,068			1,351			6,419
Aflac U.S.
Accident		8,460			4,591			8,560			4,660
Disability		5,683			3,045			5,697			3,033
Critical care		19,128			19,953			19,182			19,971
Hospital indemnity		4,771			3,038			4,757			3,027
Dental/vision		1,064			656			1,081			657
Life insurance		3,637			4,239			3,326			3,948
Other		4,446			5,033			3,477			4,105
Total		$	138,849		$	167,353		$	143,474		$	173,047


	June 30, 2026						December 31, 2025
(In millions)	Gross Premiums			Benefits and Expenses			Gross Premiums			Benefits and Expenses
Discounted expected future gross premiums and expected future policy benefits and expenses:
Aflac Japan
Cancer		$	33,155		$	31,311		$	36,796		$	34,987
Medical and other health		19,461			15,685			22,239			17,692
Life insurance		7,885			18,440			8,625			20,894
Other		897			3,261			1,018			3,671
Aflac U.S.
Accident		5,853			3,090			6,002			3,184
Disability		4,393			2,310			4,478			2,336
Critical care		11,773			10,687			11,988			10,845
Hospital indemnity		3,298			1,936			3,333			1,955
Dental/vision		729			431			755			438
Life insurance		2,541			2,179			2,358			2,076
Other		2,630			2,958			2,105			2,444
Total		$	92,615		$	92,288		$	99,697		$	100,522

Loss expense as a result of NPR capping for the three- and six-month periods ended June 30, 2026 and 2025 was immaterial.

Other Policyholders' Funds

As of June 30, 2026 and December 31, 2025, the largest component of the other policyholders' funds liability was the Company's annuity line of business in Aflac Japan. The Company's annuities have fixed benefits and premiums.

The following table presents the changes in other policyholders’ funds.


(In millions)	June 30, 2026		December 31, 2025
Other policyholders' funds:
Fixed annuities account balance, beginning of period (1)	$	5,152	$	5,221
Premiums received	43		97
Transfers from WAYS conversions	165		307
Surrenders and withdrawals	(35)		(64)
Benefit payments	(260)		(513)
Interest credited	23		49
Foreign currency translation and other	(183)		55
Fixed annuities account balance, end of period	4,905		5,152
Other deposit type reserves	383		293
Total	$	5,288	$	5,445

(1) Aflac Japan fixed annuities

The following table presents other policyholders’ funds balances by range of guaranteed crediting rates.


	June 30, 2026			December 31, 2025
(In millions)	Range of Guaranteed Minimum Crediting Rates (2)	At Guaranteed Minimum	Cash Surrender Value	Range of Guaranteed Minimum Crediting Rates (2)	At Guaranteed Minimum	Cash Surrender Value
Fixed annuities (1)	0.5% - 2.2%	$4,905	$4,839	0.5% - 2.2%	$5,152	$5,083

(1) Aflac Japan fixed annuities

(2) Weighted-average crediting rate of 1.5% at June 30, 2026 and December 31, 2025.

Aflac Japan’s fixed annuities have guaranteed fixed crediting rates which results in the policyholders' funds balances being sufficient to cover all guaranteed benefit amounts. The reserves are adequate to fully fund future benefits at any given time.

For additional information on policy liabilities, see Notes 1 and 7 of the Notes to the Consolidated Financial Statements in the 2025 Annual Report.

8. REINSURANCE

The Company periodically enters into fixed quota-share coinsurance agreements in the normal course of business, primarily to provide additional capacity for future growth, optimize capital, limit losses, and minimize exposure to significant risks. For each of its reinsurance agreements, the Company determines whether the agreement provides indemnification against loss or liability relating to insurance risk in accordance with applicable accounting standards. These reinsurance transactions are indemnity reinsurance agreements that do not relieve the Company from its obligations to policyholders. In the event that the reinsurer is unable to meet their obligations, the Company remains liable for the reinsured claims.

For certain assumed reinsurance transactions involving the reinsurance of in force blocks of business, the Company receives initial consideration for assumed reserves at inception. The consideration received is recognized in the consolidated balance sheets at fair value and a liability for future policy benefits is recorded for assumed reserves. For each of the reinsurance agreements it has entered into, the Company records either a deferred reinsurance gain liability when the consideration received exceeds the recorded reserves, or a cost of reinsurance asset when the recorded reserves exceed the consideration received. The cost of reinsurance asset balance is considered recoverable and is periodically assessed for recoverability. Inter-segment amounts associated with internal reinsurance transactions are eliminated in consolidation.

The following table reconciles direct earned premiums, direct benefits and claims, excluding reserve remeasurement gains and losses, and reserve remeasurement gains and losses to net amounts after the effect of reinsurance.


	Three Months Ended June 30,						Six Months Ended June 30,
(In millions)	2026			2025			2026			2025
Earned premiums:
Direct		$	3,364		$	3,525		$	6,785		$	6,958
Ceded		(136)			(91)			(271)			(179)
Assumed		24			36			48			72
Net earned premiums		$	3,252		$	3,470		$	6,562		$	6,851

Benefits and claims, excluding reserve remeasurement:
Direct		$	1,977		$	2,097		$	3,972		$	4,128
Ceded		(100)			(64)			(188)			(120)
Assumed		21			14			28			25
Benefits and claims, excluding reserve remeasurement		1,898			2,047			3,812			4,033
Reserve remeasurement (gains) losses:
Direct		(43)			(37)			(124)			(78)
Ceded		(2)			0			(3)			0
Assumed		(1)			0			(1)			0
Reserve remeasurement (gains) losses		(46)			(37)			(128)			(78)
Total benefits and claims, net		$	1,852		$	2,010		$	3,684		$	3,955

The Company reported a deferred reinsurance gain liability related to reinsurance transactions. The remaining consolidated deferred reinsurance gain liability of $282 million and $125 million as of June 30, 2026 and December 31, 2025, respectively, is included in future policy benefits in the consolidated balance sheets and it is being amortized over the expected premium period based on annualized premiums, units in force, or over the remaining expected life of the reinsurance contract based on benefit payments. The amortization is included in benefits and claims in the consolidated statements of earnings.

The Company also reported a reinsurance recoverable with a remaining balance, net of allowance for credit losses of $444 million and $161 million as of June 30, 2026 and December 31, 2025, respectively. As of June 30, 2026, the related allowance for credit losses was $17 million, compared with $4 million as of December 31, 2025. The allowance for credit losses is estimated using a PD / LGD method and the key credit quality indicator is the credit rating of the Company’s significant reinsurance counterparties. The Company uses external credit ratings focused on these reinsurers' financial strength and credit worthiness. As of June 30, 2026, the Company's significant reinsurance counterparties were rated A+. The Company monitors these credit ratings periodically, but not less frequently than quarterly.

In March 2026, Aflac Re entered into a coinsurance transaction whereby it assumed approximately $551 million of reserves associated with an in force block of individual whole life annuities from an external ceding company, which is a related party due to its affiliation with Japan Post Holdings Co., Ltd. Aflac Re received approximately $636 million in cash as consideration for assuming the reinsurance risk. The cash was placed in a trust to collateralize Aflac Re's obligations to the ceding company. Cash and any other assets placed in the trust continue to be owned by Aflac Re, but their use is restricted based on the terms of the transaction. If the fair market value of the assets in the trust is less than a contractually determined threshold, Aflac Re will be required to contribute additional assets to the trust. Refer to the Reinsurance-Related Trust section of Note 3 for additional information.

In January 2026, ALIJ entered into a coinsurance transaction whereby it ceded 100% of the liabilities associated with certain life insurance policies to an external reinsurer. This transaction transferred approximately $333 million of reserves associated with these policies, and ALIJ transferred approximately $236 million in cash to the reinsurer as consideration for assuming the reinsurance risk.

For additional information on reinsurance, see Notes 1 and 8 of the Notes to the Consolidated Financial Statements in the 2025 Annual Report.

9. NOTES PAYABLE AND LEASE OBLIGATIONS

A summary of notes payable and lease obligations follows:


(In millions)	June 30, 2026			December 31, 2025
1.125% senior sustainability notes paid March 2026		$	0		$	400
2.875% senior notes due October 2026		299			299
3.60% senior notes due April 2030		995			995
5.150% senior notes due May 2036		494			0
6.90% senior notes due December 2039		221			221
6.45% senior notes due August 2040		255			255
4.00% senior notes due October 2046		394			394
4.750% senior notes due January 2049		543			542
Yen-denominated senior notes and subordinated debentures:
.932% senior notes due January 2027 (principal amount ¥60.0 billion)		369			382
1.048% senior notes due March 2029 (principal amount ¥13.0 billion)		80			83
2.117% senior notes due May 2029 (principal amount ¥3.1 billion)		19			0
1.075% senior notes due September 2029 (principal amount ¥33.4 billion)		205			213
.500% senior notes due December 2029 (principal amount ¥12.6 billion)		77			80
.550% senior notes due March 2030 (principal amount ¥13.3 billion)		82			85
1.159% senior notes due October 2030 (principal amount ¥29.3 billion)		180			186
1.726% senior notes due October 2030 (principal amount ¥35.0 billion)		215			223
1.412% senior notes due March 2031 (principal amount ¥27.9 billion)		172			178
.633% senior notes due April 2031 (principal amount ¥30.0 billion)		184			191
.843% senior notes due December 2031 (principal amount ¥9.3 billion)		57			59
2.802% senior notes due December 2031 (principal amount ¥41.8 billion)		257			0
.750% senior notes due March 2032 (principal amount ¥20.7 billion)		127			131
1.990% senior notes due May 2032 (principal amount ¥18.2 billion)		112			116
1.320% senior notes due December 2032 (principal amount ¥21.1 billion)		130			134
2.003% senior notes due December 2032 (principal amount ¥23.4 billion)		144			149
.844% senior notes due April 2033 (principal amount ¥12.0 billion)		74			76
3.123% senior notes due May 2033 (principal amount ¥13.1 billion)		80			0
1.488% senior notes due October 2033 (principal amount ¥15.2 billion)		93			97
1.682% senior notes due March 2034 (principal amount ¥7.7 billion)		47			49
1.600% senior notes due March 2034 (principal amount ¥18.3 billion)		112			116
.934% senior notes due December 2034 (principal amount ¥9.8 billion)		60			62
.830% senior notes due March 2035 (principal amount ¥10.6 billion)		65			67
2.320% senior notes due May 2035 (principal amount ¥38.3 billion)		236			245
2.369% senior notes due June 2035 (principal amount ¥9.5 billion)		58			60
1.740% senior notes due March 2036 (principal amount ¥15.0 billion)		91			95
1.039% senior notes due April 2036 (principal amount ¥10.0 billion)		61			64
3.482% senior notes due May 2036 (principal amount ¥7.9 billion)		48			0
1.594% senior notes due September 2037 (principal amount ¥6.5 billion)		40			41
1.750% senior notes due October 2038 (principal amount ¥8.9 billion)		54			56
1.920% senior notes due March 2039 (principal amount ¥16.5 billion)		100			104
1.122% senior notes due December 2039 (principal amount ¥6.3 billion)		39			40
2.650% senior notes due May 2040 (principal amount ¥11.6 billion)		71			74
2.779% senior notes due June 2040 (principal amount ¥7.0 billion)		43			45
1.264% senior notes due April 2041 (principal amount ¥10.0 billion)		61			63
2.160% senior notes due March 2044 (principal amount ¥5.7 billion)		34			36
3.040% senior notes due May 2045 (principal amount ¥7.0 billion)		43			45
2.108% subordinated debentures due October 2047 (principal amount ¥60.0 billion)		366			379
1.560% senior notes due April 2051 (principal amount ¥20.0 billion)		122			127
2.144% senior notes due September 2052 (principal amount ¥12.0 billion)		73			76
1.958% subordinated bonds due December 2053 (principal amount ¥30.0 billion)		184			191
2.400% senior notes due March 2054 (principal amount ¥19.5 billion)		119			124

(continued)


(In millions)	June 30, 2026			December 31, 2025
Yen-denominated loans:
Variable interest rate loan due August 2027 (1.53% in 2026 and 1.08% in 2025, principal amount ¥11.7 billion)		72			75
Variable interest rate loan due August 2029 (1.63% in 2026 and 1.18% in 2025, principal amount ¥25.3 billion)		156			161
Variable interest rate loan due August 2032 (1.78% in 2026 and 1.33% in 2025, principal amount ¥70.0 billion)		430			446
Finance lease obligations payable through 2031		9			6
Operating lease obligations payable through 2049		77			73
Total notes payable and lease obligations		$	8,729		$	8,409

Amounts in the table above are reported net of debt issuance costs and issuance premiums or discounts, if applicable, that are being amortized over the life of the notes.

In May 2026, the Parent Company issued four series of senior notes totaling ¥65.9 billion through a public debt offering under its U.S. shelf registration statement. The first series, which totaled ¥3.1 billion, bears interest at a fixed rate of 2.117% per annum, payable semiannually, and will mature in May 2029. The second series, which totaled ¥41.8 billion, bears interest at a fixed rate of 2.802% per annum, payable semiannually, and will mature in December 2031. The third series, which totaled ¥13.1 billion, bears interest at a fixed rate of 3.123% per annum, payable semiannually, and will mature in May 2033. The fourth series, which totaled ¥7.9 billion, bears interest at a fixed rate of 3.482% per annum, payable semiannually, and will mature in May 2036. These notes are redeemable at the Parent Company's option (i) at any time, in whole but not in part, upon the occurrence of certain changes affecting U.S. taxation, as specified in the indenture governing the terms of the issuance, or (ii) in whole or in part from time to time, on or after the date that is three months prior to the stated maturity date of the applicable series in the case of the notes maturing in May 2029, December 2031 and May 2033, and on or after the date that is six months prior to the stated maturity date of the applicable series in the case of the notes maturing in May 2036, at a redemption price equal to the aggregate principal amount of the applicable series to be redeemed plus accrued and unpaid interest on the principal amount to be redeemed to, but excluding, the date of redemption.

In May 2026, the Parent Company issued $500 million of senior notes through a U.S. public debt offering. The notes bear interest at a fixed rate of 5.150% per annum, payable semiannually, and will mature in May 2036. These notes are redeemable at the Parent Company's option, in whole or in part, at any time and from time to time, at a redemption price equal to the greater of: (i) the sum of the present values of the remaining scheduled payments of principal and interest on the notes to be redeemed discounted to the redemption date on a semiannual basis at the yield to maturity for a U.S. Treasury security with a maturity comparable to the remaining term of the notes, plus 15 basis points, less interest accrued to the date of redemption, or (ii) the aggregate principal amount of the notes to be redeemed, plus, in each case, accrued and unpaid interest on the principal amount of the notes to be redeemed to the redemption date.

In March 2026, the Parent Company extinguished $400 million of 1.125% senior sustainability notes upon their maturity.

Interest expense related to the Company's notes payable, which is included in interest expense in the consolidated statements of earnings, was $63 million and $51 million for the three-month periods and $122 million and $100 million for the six-month periods ended June 30, 2026 and 2025, respectively.

Senior Note Facility Agreements

The Parent Company has two separate facility agreements: a 10-year facility agreement (2035 Facility Agreement) with a Delaware trust (2035 Trust) and a 30-year facility agreement (2055 Facility Agreement) with a Delaware trust (2055 Trust). The trusts issued and sold pre-capitalized trust securities in private placements and invested the proceeds in a portfolio of principal and/or interest strips of U.S. Treasury securities (the Strips). These trusts are an off-balance sheet funding arrangement.

The 2035 Facility Agreement provides the Parent Company the right to issue and sell to the 2035 Trust from time to time up to $1.0 billion of 5.251% senior notes due August 2035 in exchange for a corresponding amount of the Strips held by the 2035 Trust.

The 2055 Facility Agreement provides the Parent Company the right to issue and sell to the 2055 Trust from time to time up to $1.0 billion of 5.991% senior notes due August 2055 in exchange for a corresponding amount of the Strips held by the 2055 Trust.

As of June 30, 2026, the Parent Company had no senior note issuances under these facility agreements. For additional information, see Note 9 of the Notes to the Consolidated Financial Statements in the 2025 Annual Report.

A summary of the Company's lines of credit as of June 30, 2026 follows:


Borrower(s)	Type	Term	Expiration Date	Capacity	Amount Outstanding	Interest Rate on Borrowed Amount	Maturity Period	Commitment Fee	Business Purpose
Aflac Incorporated and Aflac	uncommitted bilateral	364 days	December 4, 2026	$100 million	$0 million	The rate quoted by the bank and agreed upon at the time of borrowing	Up to 3 months	None	General corporate purposes
Aflac Incorporated	unsecured revolving	5 years	May 13, 2030, or the date commitments are terminated pursuant to an event of default	¥100.0 billion	¥0.0 billion	A rate per annum equal to, at the Company's option, either (a) Tokyo Interbank Market Rate (TIBOR) plus an applicable margin or (b) an alternative TIBOR based on the rate offered by the agent to major banks in yen for the applicable period plus an applicable margin	No later than May 14, 2030	.28% to .45%, depending on the Parent Company's debt ratings as of the date of determination	General corporate purposes, including a capital contingency plan for the operations of the Parent Company
Aflac Incorporated and Aflac	unsecured revolving	5 years	February 13, 2031, or the date commitments are terminated pursuant to an event of default	$1.0 billion	$0.0 billion	A rate per annum equal to, at the Company's option, either, (a) Secured Overnight Financing Rate (SOFR) for U.S. dollar-denominated borrowings or TIBOR for Japanese yen-denominated borrowings, in either case adjusted for certain costs, or (b) a base rate determined by reference to the highest of (1) the federal funds rate plus 1/2 of 1%, (2) the rate of interest for such day announced by the agent as its prime rate, or (3) SOFR for an interest period of one month plus 1.00%, in each case plus an applicable margin	No later than February 13, 2031	.07% to .15%, depending on the Parent Company's debt ratings as of the date of determination	General corporate purposes, including a capital contingency plan for the operations of the Parent Company
Aflac Incorporated and Aflac	uncommitted bilateral	None specified	None specified	$50 million	$0 million	A rate per annum equal to, at the Parent Company's option, either (a) a rate determined by reference to SOFR for the interest period relevant to such borrowing or (b) the base rate determined by reference to the highest of (1) the lender's U.S. dollar short-term commercial loan rate and (2) the federal funds rate plus 1/2 of 1%	Up to 3 months	None	General corporate purposes
Aflac(1)	uncommitted revolving	364 days	November 30, 2026	$250 million	$0 million	Three-month term SOFR plus a 10 basis point SOFR adjustment and an additional 75 basis points per annum	No later than December 1, 2026	None	General corporate purposes
Aflac Incorporated(1) (Tranche 1)	uncommitted revolving	364 days	November 25, 2026	¥50.0 billion	¥0.0 billion	Three-month Japanese yen TIBOR plus 75 basis points per annum	No later than November 27, 2026	None	General corporate purposes
Aflac Incorporated(1) (Tranche 2)	uncommitted revolving	364 days	November 25, 2026	¥50.0 billion	¥0.0 billion	Three-month Japanese yen TIBOR plus 75 basis points per annum	No later than November 27, 2026	None	General corporate purposes
Aflac New York(1)	uncommitted revolving	364 days	December 1, 2026	$25 million	$0 million	Three-month term SOFR plus a 10 basis point SOFR adjustment and an additional 75 basis points per annum	No later than December 2, 2026	None	General corporate purposes
CAIC(1)	uncommitted revolving	364 days	December 1, 2026	$15 million	$0 million	Three-month term SOFR plus a 10 basis point SOFR adjustment and an additional 75 basis points per annum	No later than December 2, 2026	None	General corporate purposes

(1) Intercompany credit agreement

(continued)


Borrower(s)	Type	Term	Expiration Date	Capacity	Amount Outstanding	Interest Rate on Borrowed Amount	Maturity Period	Commitment Fee	Business Purpose
TOIC(1)	uncommitted revolving	364 days	December 1, 2026	$0.3 million	$0 million	Three-month term SOFR plus a 10 basis point SOFR adjustment and an additional 75 basis points per annum	No later than December 2, 2026	None	General corporate purposes
Aflac GI Holdings LLC(1)	uncommitted revolving	364 days	December 1, 2026	$30 million	$0 million	Three-month term SOFR plus a 10 basis point SOFR adjustment and an additional 75 basis points per annum	No later than December 2, 2026	None	General corporate purposes
Aflac Incorporated(1)	uncommitted revolving	364 days	December 1, 2026	$400 million	$0 million	Three-month term SOFR plus a 10 basis point SOFR adjustment and an additional 97 basis points per annum for U.S. dollar-denominated borrowings or three-month TIBOR plus 97 basis points per annum for Japanese yen-denominated borrowings	No later than December 2, 2026	None	General corporate purposes
Aflac Re(1)	uncommitted revolving	364 days	December 1, 2026	$400 million	$0 million	Three-month term SOFR plus a 10 basis point SOFR adjustment and an additional 68 basis points per annum for U.S. dollar-denominated borrowings or three-month TIBOR plus 68 basis points per annum for Japanese yen-denominated borrowings	No later than December 2, 2026	None	General corporate purposes
Aflac Asset Management LLC(1)	uncommitted revolving	364 days	December 1, 2026	$25 million	$5 million	Three-month term SOFR plus a 10 basis point SOFR adjustment and an additional 68 basis points per annum for U.S. dollar-denominated borrowings or three-month TIBOR plus 68 basis points per annum for Japanese yen-denominated borrowings	No later than December 2, 2026	None	General corporate purposes
Aflac Global Ventures LLC(1)	uncommitted revolving	364 days	December 1, 2026	$2 million	$0 million	Three-month term SOFR plus a 10 basis point SOFR adjustment and an additional 68 basis points per annum for U.S. dollar-denominated borrowings or three-month TIBOR plus 68 basis points per annum for Japanese yen-denominated borrowings	No later than December 2, 2026	None	General corporate purposes

(1) Intercompany credit agreement

The Company was in compliance with all of the covenants of its notes payable and lines of credit at June 30, 2026. No events of default or defaults occurred during the six-month period ended June 30, 2026.

For additional information, see Notes 4 and 9 of the Notes to the Consolidated Financial Statements in the 2025 Annual Report.

10. SHAREHOLDERS’ EQUITY

Share Data: The following table is a reconciliation of the number of shares of the Company's common stock for the six-month periods ended June 30.


(In thousands of shares)	2026	2025
Common stock - issued:
Balance, beginning of period	1,357,909	1,356,763
Exercise of stock options and issuance of restricted shares	921	1,027
Balance, end of period	1,358,830	1,357,790
Treasury stock:
Balance, beginning of period	839,219	806,799
Purchases of treasury stock:
Share repurchase program	17,534	16,413
Other	357	402
Dispositions of treasury stock:
Shares issued to AFL Stock Plan	(328)	(366)
Exercise of stock options	(42)	(41)
Other	(167)	(226)
Balance, end of period	856,573	822,981
Shares outstanding, end of period	502,257	534,809

Share Repurchase Program: During the first six months of 2026, the Company repurchased 17.5 million shares of its common stock for $2.0 billion as part of its share repurchase program. During the first six months of 2025, the Company repurchased 16.4 million shares of its common stock for $1.7 billion as part of its share repurchase program. As of June 30, 2026, a remaining balance of 96.8 million shares of the Company's common stock was available for purchase under share repurchase authorizations by its board of directors.

EPS: Outstanding share-based awards are excluded from the calculation of weighted-average shares used in the computation of basic earnings per share (EPS), but are included in the calculation of weighted-average shares used in the computation of diluted EPS. Anti-dilutive share-based awards are excluded from the computation of diluted EPS.

The following table presents the approximate number of share-based awards to purchase shares, on a weighted-average basis, that were considered to be anti-dilutive and were excluded from the calculation of diluted EPS for the following periods.


	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands)	2026		2025		2026		2025
Anti-dilutive share-based awards		26		2		148		1

Reclassifications from Accumulated Other Comprehensive Income

The tables below are reconciliations of accumulated other comprehensive income by component for the following periods.

Changes in Accumulated Other Comprehensive Income


Three Months Ended June 30, 2026
(In millions)	Unrealized Foreign Currency Translation Gains (Losses)			Unrealized Gains (Losses) on Fixed Maturity Securities			Unrealized Gains (Losses) on Derivatives			Effect of Changes in Discount Rate Assumptions			Pension Liability Adjustment			Total
Balance at March 31, 2026		$	(4,961)		$	(2,665)		$	(16)		$	9,458		$	85		$	1,901
Other comprehensive income (loss) before reclassification		(87)			(281)			0			957			(1)			588
Amounts reclassified from accumulated other comprehensive income (loss)		0			193			0			0			(1)			192
Net current-period other comprehensive income (loss)		(87)			(88)			0			957			(2)			780
Balance at June 30, 2026		$	(5,048)		$	(2,753)		$	(16)		$	10,415		$	83		$	2,681

All amounts in the table above are net of tax.


Three Months Ended June 30, 2025
(In millions)	Unrealized Foreign Currency Translation Gains (Losses)			Unrealized Gains (Losses) on Fixed Maturity Securities			Unrealized Gains (Losses) on Derivatives			Effect of Changes in Discount Rate Assumptions			Pension Liability Adjustment			Total
Balance at March 31, 2025		$	(4,549)		$	(1,233)		$	(18)		$	3,899		$	42		$	(1,859)
Other comprehensive income (loss) before reclassification		267			(606)			0			1,695			(1)			1,355
Amounts reclassified from accumulated other comprehensive income (loss)		0			11			1			0			1			13
Net current-period other comprehensive income (loss)		267			(595)			1			1,695			0			1,368
Balance at June 30, 2025		$	(4,282)		$	(1,828)		$	(17)		$	5,594		$	42		$	(491)

All amounts in the table above are net of tax.


Six Months Ended June 30, 2026
(In millions)	Unrealized Foreign Currency Translation Gains (Losses)			Unrealized Gains (Losses) on Fixed Maturity Securities			Unrealized Gains (Losses) on Derivatives			Effect of Changes in Discount Rate Assumptions			Pension Liability Adjustment			Total
Balance at December 31, 2025		$	(4,847)		$	(1,809)		$	(13)		$	8,035		$	86		$	1,452
Other comprehensive income (loss) before reclassification		(201)			(1,148)			0			2,380			(2)			1,029
Amounts reclassified from accumulated other comprehensive income (loss)		0			204			(3)			0			(1)			200
Net current-period other comprehensive income (loss)		(201)			(944)			(3)			2,380			(3)			1,229
Balance at June 30, 2026		$	(5,048)		$	(2,753)		$	(16)		$	10,415		$	83		$	2,681

All amounts in the table above are net of tax.


Six Months Ended June 30, 2025
(In millions)	Unrealized Foreign Currency Translation Gains (Losses)			Unrealized Gains (Losses) on Fixed Maturity Securities			Unrealized Gains (Losses) on Derivatives			Effect of Changes in Discount Rate Assumptions			Pension Liability Adjustment			Total
Balance at December 31, 2024		$	(4,998)		$	24		$	(20)		$	2,006		$	10		$	(2,978)
Other comprehensive income (loss) before reclassification		716			(1,831)			1			3,588			32			2,506
Amounts reclassified from accumulated other comprehensive income (loss)		0			(21)			2			0			0			(19)
Net current-period other comprehensive income (loss)		716			(1,852)			3			3,588			32			2,487
Balance at June 30, 2025		$	(4,282)		$	(1,828)		$	(17)		$	5,594		$	42		$	(491)

All amounts in the table above are net of tax.

The tables below summarize the amounts reclassified from each component of accumulated other comprehensive income into net earnings for the following periods.

Reclassifications Out of Accumulated Other Comprehensive Income


(In millions)	Three Months Ended June 30, 2026
Details about Accumulated Other Comprehensive Income Components	Amount Reclassified from Accumulated Other Comprehensive Income			Affected Line Item in the Statements of Earnings
Unrealized gains (losses) on available-for-sale securities		$	(244)	Net investment gains (losses)
		51		Tax (expense) or benefit(1)
		$	(193)	Net of tax
Unrealized gains (losses) on derivatives		$	0	Net investment gains (losses)
		0		Tax (expense) or benefit(1)
		$	0	Net of tax
Amortization of defined benefit pension items:
Actuarial gains (losses)		$	1	Acquisition and operating expenses(2)
Prior service (cost) credit		0		Acquisition and operating expenses(2)
		0		Tax (expense) or benefit(1)
		$	1	Net of tax
Total reclassifications for the period		$	(192)	Net of tax

(1) Based on 21% tax rate

(2) These accumulated other comprehensive income components are included in the computation of net periodic benefit cost (see Note 12 for additional details).


(In millions)	Three Months Ended June 30, 2025
Details about Accumulated Other Comprehensive Income Components	Amount Reclassified from Accumulated Other Comprehensive Income			Affected Line Item in the Statements of Earnings
Unrealized gains (losses) on available-for-sale securities		$	(14)	Net investment gains (losses)
		3		Tax (expense) or benefit(1)
		$	(11)	Net of tax
Unrealized gains (losses) on derivatives		$	(1)	Net investment gains (losses)
		0		Tax (expense) or benefit(1)
		$	(1)	Net of tax
Amortization of defined benefit pension items:
Actuarial gains (losses)		$	(1)	Acquisition and operating expenses(2)
Prior service (cost) credit		0		Acquisition and operating expenses(2)
		0		Tax (expense) or benefit(1)
		$	(1)	Net of tax
Total reclassifications for the period		$	(13)	Net of tax

(1) Based on 21% tax rate

(2) These accumulated other comprehensive income components are included in the computation of net periodic benefit cost (see Note 12 for additional details).


(In millions)	Six Months Ended June 30, 2026
Details about Accumulated Other Comprehensive Income Components	Amount Reclassified from Accumulated Other Comprehensive Income			Affected Line Item in the Statements of Earnings
Unrealized gains (losses) on available-for-sale securities		$	(258)	Net investment gains (losses)
		54		Tax (expense) or benefit(1)
		$	(204)	Net of tax
Unrealized gains (losses) on derivatives		$	4	Net investment gains (losses)


		(1)		Tax (expense) or benefit(1)
		$	3	Net of tax
Amortization of defined benefit pension items:
Actuarial gains (losses)		$	1	Acquisition and operating expenses(2)
Prior service (cost) credit		0		Acquisition and operating expenses(2)
		0		Tax (expense) or benefit(1)
		$	1	Net of tax
Total reclassifications for the period		$	(200)	Net of tax

(1) Based on 21% tax rate

(2) These accumulated other comprehensive income components are included in the computation of net periodic benefit cost (see Note 12 for additional details).


(In millions)	Six Months Ended June 30, 2025
Details about Accumulated Other Comprehensive Income Components	Amount Reclassified from Accumulated Other Comprehensive Income			Affected Line Item in the Statements of Earnings
Unrealized gains (losses) on available-for-sale securities		$	26	Net investment gains (losses)
		(5)		Tax (expense) or benefit(1)
		$	21	Net of tax
Unrealized gains (losses) on derivatives		$	(2)	Net investment gains (losses)
		0		Tax (expense) or benefit(1)
		$	(2)	Net of tax
Amortization of defined benefit pension items:
Actuarial gains (losses)		$	0	Acquisition and operating expenses(2)
Prior service (cost) credit		0		Acquisition and operating expenses(2)
		0		Tax (expense) or benefit(1)
		$	0	Net of tax
Total reclassifications for the period		$	19	Net of tax

(1) Based on 21% tax rate

(2) These accumulated other comprehensive income components are included in the computation of net periodic benefit cost (see Note 12 for additional details).

11. SHARE-BASED COMPENSATION

The Company has outstanding share-based awards under the Aflac Incorporated Long-Term Incentive Plan (as Amended and Restated February 14, 2017), as further amended on August 9, 2022 (the Plan). Share-based awards are designed to reward employees for their long-term contributions to the Company and provide incentives for them to remain with the Company. The number and frequency of share-based awards are based on competitive practices, operating results of the Company, government regulations, and other factors.

The Plan allows for a maximum number of shares issuable over its term of 75 million shares, including 38 million shares that may be awarded in respect of awards other than options or stock appreciation rights. If any awards granted under the Plan are forfeited or are terminated before being exercised or settled for any reason other than tax forfeiture, then the shares underlying the awards will again be available under the Plan. As of June 30, 2026, approximately 31.7 million shares were available for future grants under the Plan.

The Plan allows awards to Company employees as follows:

Stock options

◦Incentive stock options

◦Non-qualifying stock options

Performance-based restricted stock awards and units (performance-based restricted stock)
Restricted stock awards and units (restricted stock)
Stock appreciation rights

Non-employee directors are eligible for grants of non-qualifying stock options, restricted stock, and stock appreciation rights.

Share-based awards granted to U.S.-based grantees are settled with authorized but unissued Company stock, while those issued to Japan-based grantees are settled with treasury shares.

Vesting Schedules

Stock options and stock appreciation rights have an expiration date of no later than 10 years from the grant date. Generally, the vesting period for share-based awards is the requisite service period, which is typically three years for employees and one year for non-employee directors. Vesting for employees is generally on a ratable basis over the three years, typically subject to continued employment.

For performance-based restricted stock, vesting is also contingent on certain performance conditions typically achieved over three years.

The Compensation Committee of the board of directors has the discretion to determine vesting schedules.

Stock Options

The following table provides information on stock options outstanding and exercisable at June 30, 2026.


	Stock Option Shares (in thousands)		Weighted-Average Remaining Term (in years)		Aggregate Intrinsic Value (in millions)			Weighted-Average Exercise Price Per Share
Outstanding		169		1.2		$	13		$	38.34
Exercisable		169		1.2		13			38.34

The Company received cash from the exercise of stock options in the amount of $5 million during the first six months of both 2026 and 2025. The tax benefit realized as a result of stock option exercises and restricted stock releases was $28 million in the first six months of 2026, compared with $30 million in the first six months of 2025.

Performance-Based Restricted Stock

In 2026, the Company granted 289 thousand shares of performance-based stock, which are contingent on the achievement of the Company's financial performance metrics and certain market conditions. On the date of grant, the Company estimated the fair value of performance-based restricted stock with market conditions using a Monte Carlo simulation model. The model discounts the value of the stock at the assumed vesting date based on a risk-free interest rate. Based on estimates of actual performance versus the vesting thresholds, the calculated fair value percentage pay-out estimate will be updated each quarter. Actual performance, including modification for relative total shareholder return, may result in the ultimate award of 0% to 200% of the initial number of performance-based restricted stock issued, with the potential for no award if the Company's performance goals are not achieved.

The Company uses third-party analyses to assist in developing the assumptions used in, as well as calibrating, a Monte Carlo simulation model. The Company is responsible for determining the assumptions used in estimating the fair value of its share-based compensation awards.

Restricted Stock

The value of restricted stock is based on the fair market value of the Company's common stock at the date of grant. The following table summarizes restricted stock activity during the six-month period ended June 30, 2026.


(In thousands of shares)	Shares	Weighted-Average Grant-Date Fair Value Per Share
Restricted stock at December 31, 2025	1,867		$	86.15
Granted in 2026	928		119.68
Canceled in 2026	(18)		101.26
Vested in 2026	(1,093)		75.39
Restricted stock at June 30, 2026	1,684		$	102.84

As of June 30, 2026, total compensation cost not yet recognized in the Company's consolidated financial statements related to restricted stock was $82 million, of which $42 million (1.4 million shares) was related to performance-based restricted stock. The Company expects to recognize these amounts over a weighted-average period of approximately 1.6 years. There are no other contractual terms covering restricted stock once vested.

For additional information on the Company's long-term share-based compensation plans and the types of share-based awards, see Note 12 of the Notes to the Consolidated Financial Statements in the 2025 Annual Report.

12. BENEFIT PLANS

The Company has funded defined benefit plans in Japan and the U.S.; however, future benefits under the U.S. plan were frozen effective January 1, 2024. In January 2025, the Company purchased a nonparticipating single premium group annuity contract from an external insurer to settle its obligations under the U.S. defined pension plan and paid to the insurer the related annuity premium. As a result, the Company recognized a settlement charge of $55 million in the first quarter of 2025. Effective April 1, 2025, the external insurer began making annuity payments to plan participants, and substantially all of the outstanding benefit obligations under the plan were transferred to the external insurer and/or the Pension Benefit Guaranty Corporation. Therefore, the Company is no longer responsible for those obligations. Upon termination of the U.S. defined pension plan, approximately $13 million of excess assets were transferred to the Company's 401(k) plan in 2026.

The Company also maintains non-qualified, unfunded supplemental retirement plans that provide defined pension benefits in excess of limits imposed by federal tax law for certain Japanese, U.S. and former employees. However, future benefits under the Company's Supplemental Executive Retirement Plan and Retirement Plan for Senior Officers were frozen effective January 1, 2024, provided that actively employed participants may continue to accrue service toward eligibility for early retirement benefits or delayed early retirement benefits.

Pension expenses are included in acquisition and operating expenses in the consolidated statements of earnings, which includes other components of net periodic pension costs (other than service costs) of $2 million and $2 million for the three-month periods and $3 million and $59 million for the six-month periods ended June 30, 2026 and 2025, respectively. Total net periodic benefit cost includes the following components:


	Three Months Ended June 30,
	Pension Benefits
	Japan						U.S.
(In millions)	2026			2025			2026			2025
Components of net periodic benefit cost:
Service cost		$	3		$	3		$	0		$	0
Interest cost		3			2			3			2
Expected return on plan assets		(3)			(2)			0			0
Amortization of net actuarial (gain) loss		(1)			0			0			0


Settlement (gain) loss		0			0			0			0
Net periodic benefit cost (credit)		$	2		$	3		$	3		$	2


	Six Months Ended June 30,
	Pension Benefits
	Japan						U.S.
(In millions)	2026			2025			2026			2025
Components of net periodic benefit cost:
Service cost		$	5		$	6		$	0		$	0
Interest cost		5			4			5			10
Expected return on plan assets		(6)			(4)			0			(5)
Amortization of net actuarial (gain) loss		(1)			0			0			(1)


Settlement (gain) loss		0			0			0			55
Net periodic benefit cost (credit)		$	3		$	6		$	5		$	59

During the six months ended June 30, 2026, Aflac Japan contributed approximately $11 million (using the weighted-average Japanese yen/U.S. dollar exchange rate for the six-month period ended June 30, 2026) to the Japanese funded defined benefit plan, and Aflac U.S. did not make a contribution to the U.S. funded defined benefit plan.

For additional information regarding the Company's Japanese and U.S. benefit plans, see Note 13 of the Notes to the Consolidated Financial Statements in the 2025 Annual Report.

13. COMMITMENTS AND CONTINGENT LIABILITIES

The Company is a defendant in various lawsuits and receives various regulatory inquiries considered to be in the normal course of business. Members of the Company's senior legal and financial management teams review litigation and regulatory inquiries on a quarterly and annual basis and the Company updates the related estimates, accruals, and disclosures, if any, based on such reviews. For litigation and regulatory matters where it is probable that a loss has been incurred, and the amount of that loss can be reasonably estimated, the Company establishes accruals for loss contingencies. Where a loss may be reasonably possible but not probable, or is probable but not reasonably estimable, no accrual is recorded. The final results of any litigation or regulatory inquiries cannot be predicted with certainty. Although some of this litigation is pending in states where large punitive damages, bearing little relation to the actual damages sustained by plaintiffs, have been awarded in recent years, the Company believes the outcome of pending litigation will not have a material adverse effect on its financial position, results of operations, or cash flows.

Cyber Incidents

As previously disclosed, the Company identified an incident involving unauthorized access to a limited number of its systems in the U.S. on June 12, 2025. The Company remains in communication with regulators and has pending disputes related to the June 12, 2025 incident. The Company believes that the potential amount of loss cannot be reasonably estimated at this time.

As previously disclosed, on June 30, 2026, Aflac Japan issued a press release announcing that, on June 25, 2026, it had detected an unauthorized third-party had accessed certain Aflac Japan systems. Upon identifying the unauthorized access, Aflac Japan promptly took steps designed to contain the incident and prevent further access, including suspending certain systems. Notwithstanding the suspension of certain systems, Aflac Japan continues to serve its policyholders as it responds to this incident and there was no indication of ransomware. This incident is limited to systems in Japan. The Company’s systems related to its U.S. business were not accessed by the unauthorized third-party. Based on the information currently available, as of the date of this report, the Company believes that the potential amount of loss cannot be reasonably estimated.

Outsourcing Agreements and Other Commitments

In March 2026, the Company renewed an outsourcing agreement with a technology and consulting company that provides for mainframe computer operations, distributed mid-range server computer operations, and related support for Aflac Japan. The agreement has a remaining term of four years with an aggregate remaining cost of ¥40.1 billion ($247 million using the June 30, 2026 foreign exchange rate).

For additional information on certain outsourcing agreements, see Note 15 of the Notes to the Consolidated Financial Statements in the 2025 Annual Report. For details on certain investment commitments, see the accompanying Note 3.

Guaranty Fund Assessments

The U.S. insurance industry has a policyholder protection system that is monitored and regulated by state insurance departments. These life and health insurance guaranty associations are state entities (in all 50 states as well as Puerto Rico and the District of Columbia) created to protect policyholders of an insolvent insurance company. All insurance companies (with limited exceptions) licensed to sell life or health insurance in a state must be members of that state’s guaranty association. Under state guaranty association laws, certain insurance companies can be assessed (up to prescribed limits) for certain obligations to the policyholders and claimants of impaired or insolvent insurance companies that write the same line or similar lines of business.

Guaranty fund assessments for the three- and six-month periods ended June 30, 2026 and 2025 were immaterial.

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