Aflac (NYSE:AFL) reported third-quarter financial results on Thursday. The transcript from the company’s third-quarter earnings call has been provided below.
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Summary
Aflac Incorporated reported third quarter net earnings per diluted share of $0.61 and adjusted earnings per diluted share of $2.43, indicating strong strategic execution.
In Japan, sales declined 4% due to tough comparisons with the previous year’s launch of Miraido Cancer Insurance, though overall sales for the first nine months were up 3%.
Aflac U.S. saw a 3.5% increase in sales, driven by growth in group life, absence, disability, and network dental offerings, maintaining a solid pretax profit margin of 27.7%.
The company executed a significant reinsurance transaction in Japan, ceding approximately 500 billion yen of reserves to Aflac Re Bermuda, freeing up $1 billion in capital for potential redeployment.
Overall, Aflac maintained strong capital management, returning $1.1 billion to shareholders in Q3 through share repurchases and dividends.
Future outlook includes continued growth in both U.S. and Japan markets, with a focus on maintaining strong underwriting discipline and premium persistency.
Leadership changes were announced for Aflac Japan and Aflac U.S., effective January 1, 2027, as part of long-term succession planning.
Cybersecurity expenses impacted the quarter, adding $40 million, or $0.06 per diluted share, though operations have since returned to normal.
The company expects benefit ratios to improve in both Japan and U.S. segments due to favorable assumption updates and ongoing operational efficiencies.
Full Transcript
OPERATOR
Good day and welcome to the Aflac Incorporated third quarter 2026 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today’s presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded.
I would now like to hand the call to David Young, Senior Vice President, Capital Markets. Please go ahead.
David Young (Senior Vice President, Capital Markets)
Good morning and welcome. Thank you for joining us for Aflac Incorporated third quarter 2026 earnings call. This morning, Dan Amos, Chairman and CEO of Aflac Incorporated, will provide an overview of our results and operations in Japan and the United States. Then Max Broden, Senior Executive Vice President and CFO of Aflac Incorporated, will provide more detail on our third quarter financial results, including our capital and liquidity. These topics are also addressed in the materials we posted with our earnings release, financial supplement and quarterly CFO video update on investors.aflac.com.
For Q&A today we are also joined by Virgil Miller, President of Aflac Incorporated and Aflac U.S.; Fred Simard, Deputy President of Aflac U.S.; Charles Lake, Chairman and Representative Director; President of Aflac International; Masatoshi Koide, President and Representative Director, Aflac Life Insurance Japan; Shinsuke Morimoto, Deputy President, Aflac Life Insurance Japan; and Brad Dyslin, Global Chief Investment Officer, President of Aflac Global Investments.
Before we begin, some statements in this teleconference are forward-looking within the meaning of federal securities laws. Although we believe these statements are reasonable, we can give no assurance that they will prove to be accurate because they are prospective in nature. Actual results could differ materially from those we discuss today. We encourage you to look at our annual report on Form 10-K for some of the various risk factors that could materially impact our results.
As I mentioned earlier, the earnings release with reconciliations of certain non-U.S. GAAP measures and related earnings materials are available on investors.aflac.com. I’ll now hand the call over to Dan.
Daniel P Amos (Chairman the Board)
Thank you, David, and good morning everyone. We’re glad you’ve joined us. You probably saw our announcement earlier this week about leadership promotions for Aflac Japan and Aflac U.S. that will be effective January 1, 2027. Deputy President of Aflac Japan, Shinsuke Morimoto, will be promoted to President of Aflac Japan and Representative Director. Also, Deputy President of Aflac U.S., Fred Simard, will be promoted to President of Aflac U.S. Masatoshi Koide, currently President of Aflac Japan and Representative Director, will assume the role of Chairman of Aflac Japan and Representative Director.
Charles Lake will become Executive Advisor of Aflac Japan and assume the role of Chairman of Aflac International. These leadership announcements are the result of a long-term and deliberate succession planning process and coordination overseen by Aflac Incorporated’s Board of Directors to ensure we have the right people in the right places at the right time. Virgil and I agree that the strength of the leadership bench is a testament to the strong foundation created by Charles and Koide-san, whose leadership has had a tremendous positive impact on Aflac Japan and across the Aflac organization.
We are excited as each esteemed leader takes on new challenges and opportunities. Now turning to the results, Aflac Incorporated reported third quarter net earnings per diluted share of $0.61 and adjusted earnings per diluted share of $2.43 as we executed on our strategy of creating long-term value for our shareholders. Starting with Aflac Japan, as we communicated last quarter, we were against a challenging third quarter of 2025 sales comparison following the launch of Miraido Cancer Insurance. As a result, sales declined 4% to 18.8 billion yen in the quarter, but we were up 3% for the first nine months of the year.
Sales of Sumitatsu were up both year over year and sequentially. Sales of Anshin Pallet, our medical insurance product launched in December of 2025, increased over the prior year. Despite the tough sales comparisons Miraido faces, sales of this cancer insurance product remain relatively strong as Japanese citizens recognize the need to partner with a well-respected brand for financial protection against cancer. We continue to expect Aflac Japan sales to exceed 2025 for the quarter.
Premium persistency was 92.9%, which was solid and in line with our expectations. By maintaining strong persistency while adding new premium through sales, we seek to offset the impact of lapses and reissue as well as policies reaching paid-up status. Our extensive network of distribution channels, including agencies, alliance partners and banks, continually look for opportunities to help provide financial protection to Japanese consumers. We regard each channel as a distinct avenue to approach Japanese consumers in different demographics and stages of life.
With this approach in mind, we evaluate and support each sales channel uniquely. Turning to Aflac U.S., we remain well positioned to serve employers and employees with supplemental health products and related benefits and solutions. We are committed to our ongoing pursuit of profitable growth while maintaining strong underwriting discipline and premium persistency. Aflac U.S. generated a year-over-year 3.5% increase in sales for the third quarter. We are seeing momentum within our group business, especially group life, absence and disability, and network dental offerings.
We generated a 3.3% increase in net earned premium for the quarter and maintained strong premium persistency of 79.7%. At the same time, Aflac U.S. has maintained a solid pretax profit margin of 27.7%. As a public insurance company, our primary responsibility is to fulfill the promises we make to our policyholders while being responsive to the needs of our shareholders. We continue to be pleased with our investments producing solid investment income. Our operations generate strong capital and cash flows on an ongoing basis as we remain committed to prudent liquidity and capital management. This financial strength is the foundation that backs up our promise to our policyholders.
Balanced with financial flexibility and tactical capital deployment, we treasure our 2026 milestone of 44 consecutive years of dividend increases. Combining share repurchase and dividends, we delivered $1.1 billion back to the shareholders in the third quarter and $3.7 billion for the first nine months. In doing so, we have maintained our position among companies with the highest return on capital and one of the lowest cost of capital in the industry.
We continue to pursue more profitable growth and make tactical, opportunistic deployment of capital while being there for our policyholders when they need us most. The Japanese and U.S. insurance markets remain among the most dynamic and resilient insurance markets in the world. In both countries, rising health care costs continue to place pressure on household budgets, increasing the need for supplemental insurance solutions when unexpected medical expenses occur. What differentiates us at Aflac is not only the experience and expertise our company has gathered in the seven decades of operation, but also our purpose as a pioneer in cancer insurance and a recognized industry leader.
Our employees and sales team work every day to deliver solutions that help protect financial well-being while reflecting the compassion, empathy and trust that are known as hallmarks of our brand. The ongoing foundational strengths of our business and our capacity for continued growth support our leading position and build on the momentum. Now I’d like to turn the program over to Max.
Max Broden (Executive Vice President)
Thank you, Dan. For the third quarter of 2026, adjusted earnings per diluted share decreased 1.2% year over year to $2.46, excluding the effect of foreign currency in the quarter. In this quarter, remeasurement gains on reserves from the actuarial assumption unlock, including deferred profit liability, totaled $447 million on a pre-tax basis. Remeasurement gains also included $55 million of experience remeasurement on reserves, which was $2 million below plan with no impact on earnings per share.
The total net impact from the Q3 assumption update increased earnings per share by $0.71. In addition, third quarter results included $40 million, or $0.06 per diluted share, of cybersecurity expenses and enhancements. In Japan, variable investment income ran $22 million, or $0.03 per diluted share, below our long-term return expectations. Adjusted book value per share excluding foreign currency remeasurement decreased 6.4%. The adjusted ROE was 17.8% and 23.7% excluding foreign currency remeasurement, a very significant spread to our cost of capital.
Overall, we view these results in the quarter as solid. Starting with our Japan segment, net earned premiums in yen terms for the quarter declined 2%. Aflac Japan’s underlying earned premiums, which excludes the impact of reinsurance, paid-up policies, and deferred profit liability, declined 1.2%, roughly in line with where we expect to be for the full year. Japan’s total benefit ratio came in at 49.2% for the quarter, up 990 basis points year over year, reflecting a larger actuarial assumption unlock in the prior year.
We estimate that the impact from reserve remeasurement gains excluding the unlock was under plan but approximately 40 basis points in Q3 2026. Adjusting for both the experience in the quarter and the unlock of future assumptions, we estimate the benefit ratio to be 61.7% in the quarter. We continue to experience favorable trends in cancer related to hospitalization and mortality, leading to favorable actual-to-expected experience. Persistency remains solid and in line with our expectations at 92.9%.
We have continued to experience somewhat elevated lapse and reissue activity on recently launched products as we have expanded coverage options and competitiveness on new products. This activity in the quarter slightly declined, though, helping to improve persistency. Lapses on our first sector savings block remained low and in line with previous periods. Despite the increase in yen interest rates, our expense ratio in Japan was 21.2% for the quarter, up 140 basis points year over year.
Third quarter cybersecurity expenses and enhancements increased the expense ratio by approximately 180 basis points for the quarter. Adjusted net investment income in yen terms increased 3.7%, primarily driven by higher fixed-rate income and higher income on U.S. dollar-denominated assets from the weakening yen, offset by lower floating-rate income and higher expenses. The pre-tax margin for Japan in the quarter was 44.4%, down 780 basis points year over year, reflecting the very significant actuarial assumption unlock in the prior year, a very good result even when adjusting for this unlock.
As we previously discussed, Aflac Japan increased the internal reinsurance target from up to 10% of U.S. GAAP assets to 30% of FSA reserves. This will allow us to continue to reduce risk, improve balance sheet efficiency, and ultimately generate a higher ROE for Aflac Japan and the group. During the third quarter, Aflac Japan ceded approximately 500 billion yen of reserves on an FSA basis associated with cancer insurance policies to Aflac Re Bermuda.
We estimate that this transaction will release approximately $1 billion of capital that will over time be available for redeployment. Recognizing that the year-to-date benefit ratio is 58.8%, we now expect for 2026 that the benefit ratio in Japan will be slightly below the 60% to 63% range, and we expect the expense ratio to be on the lower end of the 20% to 23% range. As a result, we have raised the 2026 expected pre-tax profit margin range for Aflac Japan to 35% to 38%.
Turning to U.S. results, net term premiums were up 3.3%. Premium persistency remained solid at 79.7%, up 70 basis points year over year. Our total benefit ratio came in at 40.7%, 490 basis points lower than Q3 2025, driven by the unlocking of actuarial assumptions. We estimate that the impact from reserve remeasurement gains excluding the unlock was above plan by approximately 50 basis points. We estimate that the benefit ratio, adjusting for the remeasurement gains from both true-up for the experience in the quarter and unlocking our forward-looking assumptions, was 50.2%.
Our expense ratio in the U.S. was 37%, down 190 basis points year over year, primarily driven by a one-time early contract termination fee of $21 million in the prior year. As our group life and disability block of business approaches scale and therefore experiences improved profitability, we are deferring acquisition expenses. This has helped the expense ratio in the quarter by 80 basis points, with a more modest impact expected in future periods.
Adjusted net investment income in the U.S. was essentially flat, down 0.9% for the quarter. Profitability in the U.S. segment was solid, with a pre-tax margin of 27.7%, a 600 basis point increase primarily due to the actuarial assumption unlock. In the U.S., we expect the benefit ratio for 2026 to be below the 48% to 52% range and the expense ratio to be in the middle of the 36% to 39% range as we continue to scale network dental and group life and disability.
At the same time, we expect pre-tax profit margin for 2026 in the U.S. to be above the 17% to 20% range. For the Corporate and Other segment, total adjusted revenues increased 5% to $360 million. Pre-tax adjusted earnings were $72 million compared to $69 million last year, primarily driven by $91 million remeasurement gains as a result of unlocking actuarial assumptions and new reinsurance transactions. These earnings results were impacted by higher total adjusted expenses as well as lower adjusted net investment income from the reduced short-term asset balances and lower amortized hedge income.
We are pleased with the overall performance of our investment portfolio. Our private credit portfolios are delivering strong risk-adjusted net yields, while we continue to boost our loan reserves, reflecting continued pressure on commercial real estate property valuations and long-run expectations for middle market loan performance. Our third quarter results include the benefits from the very significant repositioning of our portfolio that began in the second quarter.
Again this quarter, our global investment teams executed another large switch trade, repositioning $2.3 billion of JGBs in our Aflac Japan portfolio to take advantage of what are the highest interest rates in a generation. These switch trades highlight our strong financial position and allow us to manage losses from lower-yielding assets and improve our run-rate stable net investment income. This quarter’s activity improves future NII by over $30 million.
Year to date, our approach to actively managing the portfolio has added over $80 million of annual NII and strengthened the overall quality of our consolidated portfolio by reducing the risk of future FSA impairments and improving our ALM in a very tax-efficient way. We will continue pursuing opportunities that improve the overall health and performance of the debt portfolio. For U.S. statutory, we recorded $6 million of impairments on invested assets and a $6 million valuation allowance on our mortgage loans as an unrealized loss during the quarter.
On an FSA basis, securities impairment reversals led to a net realized gain of 15.2 billion yen in the third quarter, and we booked an additional valuation allowance of 5.2 billion yen related to transitional real estate loans. This is well within our expectations and has a limited impact on regulatory earnings and capital. Aflac Inc. unencumbered liquidity stood at $2.7 billion, which was $1.7 billion above our minimum balance of $1 billion at the end of the quarter. Our adjusted leverage was 22.6% for the quarter, which is within our target range of 20% to 25%. As we hold approximately 64% of our debt in yen, this leverage ratio is impacted by moves in the yen-dollar exchange rate. This is intentional and part of our enterprise hedging program protecting the economic value of Aflac Japan.
In U.S. dollar terms, our capital position remains strong. We ended the quarter with an estimated regulatory ESR of 225%. If including the undertaking specific parameter, or USP, this would add 13 points to the regulatory ratio and result in an ESR with USP of 238%. We estimate our combined RBC to be slightly above 575%. These are strong capital ratios which we actively monitor, stress, and manage to withstand both market volatility and credit cycles as well as external shocks.
Given the strength of our capital and liquidity, we repurchased $804 million of our own stock and paid dividends of $305 million in Q3, offering good relative IRR on these capital deployments. We will continue to be flexible and tactical in the way we manage the balance sheet and deploy capital in order to drive strong risk-adjusted ROE with a meaningful spread to our cost of capital. Thank you. And now I’ll turn the call over to David.
David Young (Senior Vice President, Capital Markets)
Thank you, Max. Before we begin our Q&A, we ask that you please limit yourself to one initial question and a related follow-up. You may then rejoin the queue to ask additional questions. Our operator for today’s call will now give you instructions on how to rejoin the queue and then announce our first question.
OPERATOR
We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble the roster. And our first question will come from Wilma Burtis of Raymond James and Associates. Please go ahead.
Wilma Burtis (Analyst at Raymond James and Associates)
Hey, good morning. You talked about the $1 billion that you freed up via the reinsurance transaction. Could you talk a little bit more about how much runway there is there to continue with Bermuda reinsurance? Thanks.
Max Broden (Executive Vice President)
Thank you for the question, Wilma. So, post this transaction, we have ceded roughly 15% of our total FSA reserves from Aflac Japan to Aflac Bermuda. And as we put in the last quarter, we communicated that we have changed the way we approach this from evaluating this on a U.S. GAAP basis to evaluating this on an FSA reserving basis. And with us now standing at about 15%, and we have an internal risk limit that we have set at 30%, that means that we have very meaningful runway to continue to execute further reinsurance transactions between Aflac Japan and Aflac Re Bermuda to further improve the risk composition of Aflac Japan and also enhance the overall capital position and liquidity and ultimately improving the ROE of the total group.
Wilma Burtis (Analyst at Raymond James and Associates)
Okay, thank you. And I think Aflac as a whole has a ton of excess capital in different forms. So maybe you could talk about some of the deployment opportunities where you think you can grow. I know you’ve talked a little bit more about having some appetite for third-party reinsurance, acquiring blocks. You know, are there opportunities there? What are some of the other opportunities to grow? Thanks.
Max Broden (Executive Vice President)
So I think that overall for us, obviously the best new business return opportunities that we have is to write another policy in our operations in the U.S. and Japan. That is generally where we see the best IRRs for our capital and that’s where we are pushing our capital to go. So that’s number one. In terms of external reinsurance, we see this over time as a significant opportunity for us where we can leverage our balance sheet. We can also leverage the strengths that we have having a balance sheet that is very long morbidity. And when we then write life and annuity business coming out of Japan, we get very significant diversification benefits. So we find ourselves in a very interesting opportunity to capitalize on this strength.
That being said, in terms of capital consumption, we would expect relatively limited capital consumption for this. And in fact, the reinsurance operations is very profitable as is, very cash- and capital-generative as is. So this strategy, I don’t think that it will materially shift the way we manage capital overall in terms of providing capital to all of our insurance operations as well as conduct capital management through dividends and buybacks.
OPERATOR
Thank you. The next question comes from Tom Gallagher of Evercore ISI. Please go ahead.
Tom Gallagher (Analyst at Evercore ISI)
Morning. First one question on the U.S. and then my follow-up’s on Japan. So the U.S. question: there’s been some group disability pressure at peers from behavioral health claims, which obviously creates some uncertainty right now. Now, you’re very small in that part of the market, but you’re growing a lot. When you think about what’s happening, does it make you want to pump the brakes and evaluate, or do you see it more as an opportunity to take some market share as others look to raise rates?
Virgil Miller (President)
Good morning, Tom. This is Virgil. First, let me give some color on the question you just asked. As I do so though, I want to go back to something Dan stated earlier. He congratulated some recent promotions for the organization. I do want to acknowledge and congratulate Fred Simard. He’s our deputy president for the U.S. He’ll be taking over effective in January as the president. So I’m starting to transition some of my duties. I’ll give you some color and see if he wants to add, and we’ll be doing the same today.
I want to congratulate Morimoto-san in Aflac Japan. You’re going to hear more from both of these two gentlemen today. But to refer to your question, to your point, it is materially small for us at the time right now. Overall I’m very pleased with the growth that we’re seeing in our life and disability overall business. But when you look at the PFML particularly and you look at the disability portion of our block, it is very, very small. We are seeing a slight uptick but again it has no materiality to us, to us. And we’re going to continue to maintain our strong discipline though of how we underwrite that particular business.
So let me turn over to Fred and ask him if he has any additional comments.
Fred Simard (Deputy President of Aflac U.S.)
Hey, good morning Tom. So this is Fred Simard. A couple of things. First, our loss ratio actually from a year-ago quarter to now is actually down a few bps. So we are keeping an eye on claim performance and our execution on the renewal program is very strong. We’re able to get some good rate action and profit improvement and the team has done a very good job at pricing that business. And so I see this, as you were asking, as an opportunity for us to keep growing.
Tom Gallagher (Analyst at Evercore ISI)
Gotcha. That’s helpful. And then my follow-up on Japan. So third sector sales were weak. Tsumitas continued to grow. Can you talk about how you see that mix changing and if you’d be comfortable growing the more asset-intensive businesses since obviously with higher rates in Japan there’s probably more demand? But then I’m just wondering, historically Aflac hasn’t really written much asset-intensive business. How do you balance the growth opportunity there with the cost of capital impacts as a firm if it does end up adding asset leverage depending on how much you grow?
Max Broden (Executive Vice President)
So Tom, let me kick this off and address it from my capital standpoint and then I invite Aflac Japan to also comment on this and give their views. Obviously there is no doubt that the history of Aflac Japan is as a third sector company. That is the core of our business. It is also, from my lens, a business that is not very much impacted by external macro factors. That means that this is a business that we are very much in control of. It’s relatively easy for us to control the different risks of this business and therefore we will continue to be a very significant player in the third sector for many, many, many years into the future.
As relates to first sector business, it’s a more capital-intensive business. You need financing structures like reinsurance in order to play profitably in that sector. And it’s also exposed to macro factors like interest rates in particular. That means that you need to be much more flexible in how you price and reprice that business and also somewhat more flexible in how you approach that, i.e., you need to be a little bit opportunistic when you grow and when you shrink that business.
And that’s the view that we take. But I will tell you that right now, given the significant increase in yen interest rates that we have experienced, we are in a great position to not only grow that business from current levels, but I would argue significantly grow that business. It offers extremely attractive new business IRRs and the VNB on this business is very, very attractive, especially post reinsurance that we are utilizing for the blocks that we have in place. So from that standpoint, from a capital allocation standpoint, we’re very pleased with the business we have written and we feel very comfortable about continuing to grow that business.
Now we are sensitive that over time if it becomes too big, it would have an impact obviously on our cost of capital. We’re quite aware of that and it’s something that we monitor. But as of right now, our total first sector savings in force is actually still shrinking. That is, the WAYS block is running off faster than what we add in Tsumitas. So from that standpoint, we’re very comfortable with where we are.
Tom Gallagher (Analyst at Evercore ISI)
Thanks for that.
Daniel P Amos (Chairman the Board)
Morimoto, do you have any comments, or Koide, whoever wants to take that? Any comments from your side?
Yoshizumi
Hi, thank you for your question. This is Yoshizumi. Let me talk a little bit from the sales perspective. Currently, Tsumitas accounts for approximately 20% of our total sales. While we remain a third sector-oriented company, Tsumitas is playing an important role as it is contributing to the expansion of our customer base and also making a contribution through concurrent sales with the third sector product. Going forward, we will continue to strengthen our customer base by attracting young and middle-aged customers and new customers through Tsumitas and promote concurrent sales of cancer and medical insurance.
Thank you.
Daniel P Amos (Chairman the Board)
Go ahead. All right. The comment I want to make about Tsumitas is we were very cautious in getting into this business and it has hit all the expectations that I’ve wanted so far. I think, of course, higher interest rates is what’s driven it. But in addition to that, what we found is our medical aspect of the product is bringing on customers, and it’s not quite as interest-rate sensitive. Now, if you deal with financial institutions, they’re much more so that way.
But our existing sales organization finds that the Tsumitas product helps fill a need in addition to the higher interest rates and better returns. So it’s been both ways for us. And I think it’s going to continue to play an important role in 2027 as well. Going forward, it’ll depend on interest rates to a degree, but we’re monitoring it and we have the capacity today to react at a much faster level than we used to. And that again is a real difference in what we’ve done. I just like the way we’ve been structured. The one thing about it at Aflac we’ve tried to do is when we see something trend that we don’t like, then when that trend breaks, we fix it, work toward it, and then improve. And that’s what this product is.
This is an improved product for us that has a lot of potential going forward.
OPERATOR
The next question comes from Tracy Bengue of Wolfe Research. Please go ahead.
Tracy Bengue (Analyst at Wolfe Research)
Thank you. It’s good to see that you’re now seated. About 15% of Aflac Japan FSA reserves to Bermuda. Can you just confirm where cession stood before this transaction? The target moved from up to 10% of U.S. GAAP assets to 30% of FSA reserves. So that’s a different basis. So I’m unsure of the starting point. We looked at the March 31 Japanese statutory filings and we calculated about 12%. But I just want to confirm, is that the right starting point?
Max Broden (Executive Vice President)
Yeah, you’re in the ballpark. We were at 10% prior before this transaction, and this moved from 10 to 15.
Tracy Bengue (Analyst at Wolfe Research)
Okay, so how does five points in one quarter kind of trend to your usual run rate? When we were looking at those statutory filings, we saw about two and a half points a year. So would you say that was five points were a high water mark pace, or just will help us in terms of getting to a timeline to reach 30%?
Max Broden (Executive Vice President)
Tracy, this is not necessarily going to be a straight line. And one of the things that we have evaluated with this transaction is that every time we execute a transaction, it doesn’t matter if you cede 100 billion yen or if you cede 500 billion yen, it’s the same work that needs to go into a transaction, same number of people that needs to be involved, the same number of calculations that needs to be done. So there’s a fixed expense associated with each transaction and that does not necessarily go up with any size.
Therefore, we have opted in this time to do a little bit of a bigger transaction, as you clearly noted, than what we have done in the past. And that means that we may or may not do this on a linear basis going forward. But ultimately this will be driven by the needs for Aflac Japan. Aflac Japan is the cedent. They control this timeline and they make the decisions what is best for Aflac Japan in order to ultimately end up with the best risk-reward for Aflac Japan. And Aflac Re Bermuda is here, the provider of the capital solution to Aflac Japan. And obviously Aflac Re Bermuda stands ready to serve its clients.
Tracy Bengue (Analyst at Wolfe Research)
Okay, thank you. And you’ve now done these two switch trades. What would the yen currency and Japanese yields need to look like for a third trade to make sense without meaningfully impacting capital? And can you contextualize how much older, lower-yielding paper is left to sell?
Bradley E. Dyslin (Executive Vice President)
Yeah, good morning, Tracy, this is Brad. Yeah, we’ve been quite active on the switch trades. We’ve repositioned 7 billion through this program this year alone. Most of that has been in the JGB portfolio where we’re doing exactly what you’re getting at, which is recycling the lower-yielding existing assets and accelerating the deployment into the current higher-yield environment. There’s a lot of pieces that have to come together behind a switch trade.
There’s accounting considerations, taxes, liquidity, capital, ALM. There’s just a lot of boxes that need to be checked, including of course the unrealized losses on the assets that you’re selling. We’re going to continue to look at this. The more we do, the harder it is to find additional opportunities. We’ll see where rates go. Obviously higher rates help on the reinvestment front, but they also can hurt you on the additional losses on the legacy book. So I’m really proud of the work the team has done to date. It takes a lot of coordination across the organization. We’ll see what we can do going forward, but it’s going to be difficult to have the same level of impact that we’ve had so far.
OPERATOR
Next question comes from Pablo Sinzen of Morgan Stanley. Please go ahead.
Pablo Sinzen (Analyst at Morgan Stanley)
Hi, good morning. Appreciate the details on the assumption review. The question is, given the favorable update overall, would you expect an ongoing positive impact on the benefit ratios in Japan and the U.S.?
Max Broden (Executive Vice President)
Pablo, I’m sorry, could you repeat that?
Pablo Sinzen (Analyst at Morgan Stanley)
Yep. So just given the favorable assumption update, would you expect an ongoing positive impact on the benefit ratios in Japan and in the U.S.?
Max Broden (Executive Vice President)
Yes, Pablo. So with this unlock, we are lowering the future net premium ratios and that means that there will be an ongoing future impact to the benefit ratios in the respective segments. So for Japan, we lowered the net premium ratio by 70 basis points. So we would expect, all things being equal, that as it relates to the in-force business, that in-force business will have roughly a 70 basis points lower benefit ratio going into the fourth quarter and going forward.
For the U.S. that same number is 60 basis points. And for Aflac Re Bermuda it is 320 basis points.
Pablo Sinzen (Analyst at Morgan Stanley)
Thanks, Max. And then second question, my understanding is that third quarter sales in Japan were disrupted by the cyber incident. So just any update there—are operations back to normal and do you see some potential benefit from sales getting deferred into the next quarter?
Yoshizumi
Hi, this is Yoshizumi speaking. Let me comment. From CEO’s perspective, as Dan stated last quarter, we expect Aflac Japan sales to exceed 2025 sales as Aflac Japan continues to execute its strategy of meeting the needs of its current customers based on which stage of life they are in. As mentioned earlier, upon this incident we have been prioritizing our customer support. And to prioritize our customers, we have been suspending several initiatives including direct mail, customer outbound calls. However, in September we have resumed all these activities. And since the entry to the fourth quarter, our sales has recovered and now back to normal. And October sales is as we have been expected. We will continue to leverage our diverse distribution channel which is one of our core competitive advantages and promote all three product line simultaneously to drive 2026 sales in excess of 2025.
Thank you.
OPERATOR
The next question comes from Joseph Mularo of Jefferies. Please go ahead.
Joseph Mularo (Analyst at Jefferies)
Hi, thanks for the question. A lot of good color and commentary on Japan sales. So hoping you could give some color and commentary on the U.S.
Virgil Miller (President)
Yeah, thank you. Hey, this is Virgil. So first let me tell you that overall I’m pleased with the quarter. For the U.S. you saw positive momentum. We were up three and a half percent on new sales, 3.2% for our overall earned premium. When you look underneath the new sales though, as we’ve talked about it before, that we invested in these—by the way—our life, absence and disability business, our consumer markets platform, and our dental and vision.
Just to give you a little bit more detail behind the scenes, those three platforms for the U.S. made up a 15% growth in the quarter and we’re very pleased with the recovery that we’ve seen with our dental and vision platform, and that is up 67% for the quarter. So, and remember this as part of our strategy, and I should have noted this earlier, with our dental and vision and with our group life and absence disability products, we’re really looking to sell those alongside our voluntary benefit products.
And when you look at the dental and vision platform for the quarter, we were selling 90 cents on the dollar, which basically means that for every dental product that we sell, 90 cents on the dollar is also sold with a voluntary benefit product. That is the strategy that we had going in. That strategy is working and pleased with the overall performance of that. Any additional comments, Fred?
Fred Simard (Deputy President of Aflac U.S.)
Well, no, I guess the thing I would say on earned premium is we grew 3.3%. If you look at the group platform we grew 17%. As Virgil said, we actually grew 29% for the quarter on earned premium, D&V 55% which is very strong, and voluntary benefits 7.5%. At the same time the individual platform shrunk about 1.5%. And so we are working on that. So back to you.
Virgil Miller (President)
Yeah, just one more comment to close out. You can see the momentum we have if you look at the historical trends for the U.S. Fourth quarter is normally our highest activity and our highest performance. I’m expecting that momentum to go in, but there’s the way we count our business. I do want to note though that in the fourth quarter we will have an extra week of productivity so that will count toward this year’s sales number. But either way I’m expecting us to be better than what we were last year.
So I do want to note that as we go into that fourth quarter. Thank you.
Joseph Mularo (Analyst at Jefferies)
Great. Thanks so much for that. One quick question on remeasurement gains. We’ve continued to see them come in pretty strong over time and now we have this favorable assumption review. What’s the outlook? Is there a possibility for future normal-course remeasurement gains moving forward?
Max Broden (Executive Vice President)
Thank you for the question. Every third quarter we do a deep dive into our future actuarial assumptions and we true them up and we set the assumptions to the best that we can and that is what we have now applied into this unlock. The same thing relates to when we true up our experience in each quarter as well—that we try to get it dialed in to the best estimate going forward—and that’s how we ultimately both set assumptions and that’s what is driving our reserves.
Now I do recognize that over time we have had favorable remeasurement gains and that is simply a function of the very favorable experience that our underlying reserves have generated. And we’re very pleased and we’re very fortunate for that. But that is the main driver of obviously the very good experience that we had. If you dive into this unlock in this quarter, the main driver specifically in Japan has actually been mortality, where we’ve seen mortality increase of non-cancer-related mortality that have hit our first sector life insurance business where we actually saw reserves move up while we had a remeasurement loss on the first sector.
But if you then turn to the third sector, which is predominantly our cancer insurance block, we had very significant remeasurement gains because of the non-cancer-related mortality that, when you run that through our block of business, is very favorable for us.
Joseph Mularo (Analyst at Jefferies)
Thanks for the color.
OPERATOR
This concludes our question and answer session. I’d like to turn the call over to David Young for any closing remarks.
David Young (Senior Vice President, Capital Markets)
Thank you, Andrea, and thank you all for joining us today. Just want to remind you that we will be hosting our Financial Analyst Briefing at the New York Stock Exchange on December 3rd, and if you would like to attend please reach out to Investor and Rating Agency Relations. We look forward to seeing you or talking to you then, and thank you for your time today. Have a great rest of your week.
OPERATOR
The conference has now concluded. Thank you for attending today’s presentation and you may now disconnect.
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