POLICY LIABILITIES

12 Months Ended

Dec. 31, 2025

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 for the years ended December 31. 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.


	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.


	2024
	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, 2023	$	17,509	$	14,697	$	6,488	$	1,088	$	2,488	$	1,652	$	4,074	$	1,107	$	206	$	853	$	277
Beginning balance at original discount rate	16,452		14,040		6,258		1,069		2,630		1,738		4,416		1,193		217		909		272
Effect of changes in cash flow assumptions	(625)		(154)		(190)		(19)		65		(47)		(106)		(21)		(17)		(5)		(8)
Effect of actual variances from expected experience	(71)		(164)		(97)		(14)		66		12		(100)		21		(12)		(29)		13
Adjusted beginning of period balance	15,756		13,722		5,971		1,036		2,761		1,703		4,210		1,193		188		875		277
Issuances	983		361		478		16		307		364		543		231		52		226		592
Interest accrual	378		302		110		17		106		66		173		46		9		37		25
Net premiums collected (1)	(1,453)		(1,135)		(862)		(101)		(479)		(401)		(578)		(244)		(39)		(157)		(53)
Foreign currency translation	(1,655)		(1,405)		(613)		(104)		0		0		0		0		0		0		0
Other	(1)		0		0		0		(8)		(6)		(8)		(5)		(1)		(5)		(17)
Ending 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 discount rate assumptions	176		(28)		72		(18)		(190)		(91)		(439)		(99)		(13)		(67)		2
Balance at December 31, 2024	$	14,184	$	11,817	$	5,156	$	846	$	2,497	$	1,635	$	3,901	$	1,122	$	196	$	909	$	826
Present value of expected future policy benefits:
Balance at December 31, 2023	$	50,161	$	25,257	$	29,731	$	5,178	$	3,109	$	2,422	$	11,290	$	1,943	$	478	$	1,764	$	798
Beginning balance at original discount rate	43,626		25,023		30,256		5,444		3,302		2,541		12,120		2,076		506		1,971		769
Effect of changes in cash flow assumptions	(815)		(228)		(302)		(7)		109		(73)		(112)		(31)		(28)		(3)		(12)
Effect of actual variances from expected experience	(117)		(193)		(110)		(24)		91		(16)		(144)		21		(16)		(43)		(7)
Adjusted beginning of period balance	42,694		24,602		29,844		5,413		3,502		2,452		11,864		2,066		462		1,925		750
Issuances	1,004		373		488		22		311		381		559		237		55		231		597
Interest accrual	1,356		570		582		93		133		98		515		84		20		78		50
Benefit payments	(2,773)		(1,033)		(1,510)		(208)		(560)		(465)		(925)		(314)		(60)		(108)		(104)
Foreign currency translation	(4,425)		(2,555)		(3,074)		(555)		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	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 discount rate assumptions	2,925		(1,351)		(2,065)		(540)		(259)		(136)		(1,312)		(176)		(36)		(279)		(5)
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
Net liability for future policy benefits	26,597		8,789		19,109		3,379		630		695		6,800		775		245		938		462
Less: reinsurance recoverable	5,085		1,245		0		0		0		0		0		0		0		18		0
Net liability for future policy benefits after reinsurance recoverable	$	21,512	$	7,544	$	19,109	$	3,379	$	630	$	695	$	6,800	$	775	$	245	$	920	$	462

(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 as of 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.


	2024
	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)	3.9 %	2.5 %	2.1 %	1.8 %	4.0 %	4.3 %	4.6 %	4.5 %	4.3 %	3.8 %	5.4 %
Weighted-average interest, current discount rate (1)	2.2 %	2.8 %	2.1 %	2.5 %	5.3 %	5.2 %	5.3 %	5.3 %	5.3 %	5.3 %	5.3 %
Weighted-average liability duration (years)	12.6	23.5	16.1	16.7	7.7	5.6	11.1	9.0	7.6	13.5	9.1

(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 as of December 31. 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)	2025			2024
Balances included in future policy benefits rollforward:
Aflac Japan
Cancer		$	22,780		$	26,597
Medical and other health		7,343			8,789
Life insurance		16,347			19,109
Other		2,946			3,379
Aflac U.S.
Accident		659			630
Disability		651			695
Critical care		6,900			6,800
Hospital indemnity		784			775
Dental/vision		236			245
Life insurance		1,055			938
Other		476			462
Corporate and other		4,317			5,072
Deferred profit liability		2,066			1,844
Deferred reinsurance gain liability		757			806
Intercompany eliminations (1)		(4,997)			(5,760)
Total		$	62,320		$	70,381

(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 for additional details.

There were no changes to the inputs, judgments or methods used in measuring the liability for future policy benefits in 2025 and 2024.

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 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) (effective for Aflac Japan's 2025 fiscal year-end, which is March 31, 2026), 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 years ended December 31, 2025 and 2024.

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.

•In 2025 and 2024, 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 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.

•In 2024, the Company's annual assumption review process resulted in favorable changes largely due to recent favorable Japan morbidity experience.

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 for the years ended December 31.


(In millions)	2025		2024		2023
Net earned premiums:
Aflac Japan
Cancer	$	3,405	$	3,545	$	4,063
Medical and other health	2,131		2,181		2,631
Life insurance	1,227		1,225		1,532
Other	129		134		149
Aflac U.S.
Accident	1,229		1,265		1,288
Disability	1,408		1,327		1,256
Critical care	1,763		1,763		1,749
Hospital indemnity	728		727		725
Dental/vision	207		202		214
Life insurance	683		565		475
Other	200		110		45
Corporate and other	806		680		400
Reinsurance ceded	(368)		(284)		(404)
Total	$	13,548	$	13,440	$	14,123

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 for the years ended December 31.


(In millions)	2025		2024		2023
Interest expense:
Aflac Japan
Cancer	$	935	$	978	$	1,061
Medical and other health	272		268		274
Life insurance	459		472		501
Other	75		76		80
Aflac U.S.
Accident	28		27		25
Disability	30		32		34
Critical care	338		342		345
Hospital indemnity	37		38		39
Dental/vision	11		11		13
Life insurance	45		41		37
Other	24		25		27

Total	$	2,254	$	2,310	$	2,436

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 as of December 31. 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.


	2025						2024
(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		$	52,505		$	54,844		$	51,712		$	56,881
Medical and other health		32,757			35,043			33,250			34,864
Life insurance		10,781			37,340			10,915			37,520
Other		1,351			6,419			1,477			6,479
Aflac U.S.
Accident		8,560			4,660			8,862			4,687
Disability		5,697			3,033			5,727			3,094
Critical care		19,182			19,971			19,624			20,340
Hospital indemnity		4,757			3,027			4,859			3,017
Dental/vision		1,081			657			1,118			679
Life insurance		3,326			3,948			2,966			3,559
Other		3,477			4,105			2,143			2,273
Total		$	143,474		$	173,047		$	142,653		$	173,393


	2025						2024
(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		$	36,796		$	34,987		$	40,170		$	40,781
Medical and other health		22,239			17,692			25,171			20,606
Life insurance		8,625			20,894			9,367			24,265
Other		1,018			3,671			1,204			4,225
Aflac U.S.
Accident		6,002			3,184			6,057			3,127
Disability		4,478			2,336			4,404			2,330
Critical care		11,988			10,845			11,900			10,701
Hospital indemnity		3,333			1,955			3,312			1,897
Dental/vision		755			438			761			441
Life insurance		2,358			2,076			2,050			1,847
Other		2,105			2,444			1,290			1,288
Total		$	99,697		$	100,522		$	105,686		$	111,508

Loss expense as a result of NPR capping for the years ended December 31, 2025, 2024 and 2023 was immaterial.

Other Policyholders' Funds

As of December 31, 2025 and 2024, 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 for the years ended December 31.


(In millions)	2025		2024
Other policyholders' funds:
Fixed annuities account balance, beginning of period (1)	$	5,221	$	5,939
Premiums received	97		104
Transfers from WAYS conversions	307		249
Surrenders and withdrawals	(64)		(58)
Benefit payments	(513)		(446)
Interest credited	49		49
Foreign currency translation and other	55		(616)
Fixed annuities account balance, end of period	5,152		5,221
Other deposit type reserves	293		239
Total	$	5,445	$	5,460

(1) Aflac Japan fixed annuities

The following table presents other policyholders’ funds balances by range of guaranteed crediting rates as of December 31.


	2025			2024
(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%	$5,152	$5,083	0.5% - 2.2%	$5,221	$5,150

(1) Aflac Japan fixed annuities

(2) Weighted-average crediting rate of 1.5% at December 31, 2025 and 2024.

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.

See Note 1 for additional information on policy liabilities.