AFLAC INC. recently released its 10-K report, providing a detailed overview of its business operations and financial performance. The company operates in two segments, Aflac Japan and Aflac U.S., offering a range of supplemental health and life insurance products. Aflac Japan provides various insurance products in Japan, while Aflac U.S. offers insurance products in the United States through various distribution channels.
In the "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" section, AFLAC INC. disclosed the potential impact of morbidity assumptions on its LFPB (loss from policy benefits) balance. The report stated that a 100 basis point decrease in morbidity assumptions would decrease the LFPB balance by $299 million, assuming all other factors remain constant. Conversely, a 100 basis point increase in morbidity assumptions would increase the LFPB balance by $303 million.
The report also provided insights into the company's income tax provisions and the evaluation of tax positions in accordance with U.S. GAAP. It mentioned that an increase or decrease in the company's effective tax rate by one percentage point would result in a corresponding increase or decrease in the company's 2025 income tax expense of $50 million.
Furthermore, the 10-K report detailed the company's exposure to various market risks, including currency risk, interest rate risk, credit risk, and equity risk. It discussed the impact of foreign currency fluctuations on the company's Japanese yen-denominated assets and liabilities, as well as its efforts to manage currency risk through hedging activities.
The report also outlined the company's interest rate risk exposure, highlighting the potential impact of changes in interest rates on the fair value of its investment portfolio. It provided examples of how the fair value of fixed maturity securities would be affected by changes in market interest rates, assuming all other factors remain constant.
The market has reacted to these announcements by moving the company's shares -0.09% to a price of $109.51. If you want to know more, read the company's complete 10-K report here.
