Aflac Inc. Files 2023 Annual Report on Form 10-K

TL;DR

<b>Aflac Inc. has submitted its 2023 annual report (10-K), providing a comprehensive overview of its financial performance and position.</b>

AI Summary

AFLAC INC (AFL) filed a Annual Report (10-K) with the SEC on February 22, 2024. Aflac Inc. filed its 2023 Form 10-K on February 22, 2024, reporting on its fiscal year ended December 31, 2023. The company is incorporated in Georgia (GA) and operates within the Accident & Health Insurance sector (SIC 6321). Aflac Inc. is listed on the New York Stock Exchange (NYSE) under ticker AFL. The filing includes financial data for the fiscal years 2023, 2022, and 2021. Key financial statement elements such as common stock, additional paid-in capital, retained earnings, and accumulated other comprehensive income are detailed for the period ending December 31, 2020.

Why It Matters

For investors and stakeholders tracking AFLAC INC, this filing contains several important signals. This 10-K filing provides stakeholders with the latest audited financial statements and management's discussion and analysis, crucial for assessing the company's performance and future outlook. The detailed financial information allows investors and analysts to evaluate Aflac's financial health, profitability, and risk exposure over the past fiscal year.

Risk Assessment

Risk Level: medium — AFLAC INC shows moderate risk based on this filing. The filing is a standard 10-K, which is a comprehensive annual report. While it contains detailed financial information, it does not inherently signal immediate positive or negative developments beyond the typical reporting cycle, thus presenting a medium level of risk for immediate trading decisions based solely on this document.

Analyst Insight

Review the detailed financial statements and management's discussion and analysis within the 10-K to understand Aflac's performance drivers and identify any significant trends or risks.

Key Numbers

• 2023-12-31 — Fiscal Year End (Conformed period of report)
• 2024-02-22 — Filing Date (Filed as of date)
• 192 — Public Document Count (Number of documents in the filing)
• 6321 — SIC Code (Standard Industrial Classification)

Key Players & Entities

• AFLAC INC (company) — Filer name
• GA (location) — State of incorporation
• NYSE (company) — Exchange ticker symbol is listed on
• AFL (ticker) — Ticker symbol

FAQ

Industry Context

Aflac Inc. operates in the insurance industry, specifically focusing on accident and health insurance. This sector is characterized by regulatory oversight and sensitivity to economic conditions affecting consumer spending and healthcare.

Regulatory Implications

Insurance companies like Aflac are subject to extensive regulation by state and federal authorities to ensure solvency and protect policyholders. Filings like the 10-K are part of this regulatory framework.

What Investors Should Do

1. Analyze the financial statements for revenue trends, profitability, and changes in assets and liabilities.
2. Review the Management's Discussion and Analysis (MD&A) section for insights into the company's strategic priorities and outlook.
3. Examine any disclosed risk factors to understand potential challenges and their impact on the company.

Key Dates

• 2023-12-31: Fiscal Year End — Reporting period for the 10-K
• 2024-02-22: Filing Date — Date the 10-K was officially filed with the SEC

Glossary

10-K

An annual report required by the U.S. Securities and Exchange Commission (SEC), which gives a comprehensive summary of a company's financial performance. (This is the primary document filed by Aflac Inc. to report its annual financial results.)

SIC

Standard Industrial Classification, a system used to classify industries by the type of business operation. (Helps categorize Aflac Inc. within the Accident & Health Insurance industry.)

Year-Over-Year Comparison

This is the initial filing of the 2023 annual report. Comparative data for previous years is available within the document.

Filing Documents

• afl-20231231.htm (10-K) — 9149KB
• afl123123ex1039.htm (EX-10.39) — 17KB
• afl123123ex21.htm (EX-21) — 46KB
• afl123123ex23.htm (EX-23) — 3KB
• afl123123ex311.htm (EX-31.1) — 11KB
• afl123123ex312.htm (EX-31.2) — 11KB
• afl123123ex32.htm (EX-32) — 9KB
• afl123123ex97.htm (EX-97) — 27KB
• afl-20231231_g1.jpg (GRAPHIC) — 17KB
• afl-20231231_g2.jpg (GRAPHIC) — 302KB
• afl-20231231_g3.jpg (GRAPHIC) — 662KB
• aflacinclogo.jpg (GRAPHIC) — 17KB
• 0000004977-24-000053.txt (&nbsp;) — 50945KB
• afl-20231231.xsd (EX-101.SCH) — 171KB
• afl-20231231_cal.xml (EX-101.CAL) — 164KB
• afl-20231231_def.xml (EX-101.DEF) — 1588KB
• afl-20231231_lab.xml (EX-101.LAB) — 2038KB
• afl-20231231_pre.xml (EX-101.PRE) — 1912KB
• afl-20231231_htm.xml (XML) — 12612KB

Risk Factors

Item 1A. Risk Factors 13

Unresolved Staff Comments

Item 1B. Unresolved Staff Comments 27

Cybersecurity

Item 1C. Cybersecurity 27

Properties

Item 2. Properties 28

Legal Proceedings

Item 3. Legal Proceedings 28

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 28 PART II

Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Item 5. Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 29

[Reserved]

Item 6. [Reserved] 31

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 32

Quantitative and Qualitative Disclosures About Market Risk

Item 7A. Quantitative and Qualitative Disclosures About Market Risk 74

Financial Statements and Supplementary Data

Item 8. Financial Statements and Supplementary Data 81

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 187

Controls and Procedures

Item 9A. Controls and Procedures 187

Other Information

Item 9B. Other Information 188

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 188 PART III

Directors, Executive Officers and Corporate Governance

Item 10. Directors, Executive Officers and Corporate Governance 189

Executive Compensation

Item 11. Executive Compensation 189

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 189

Certain Relationships and Related Transactions, and Director Independence

Item 13. Certain Relationships and Related Transactions, and Director Independence 189

Principal Accounting Fees and Services

Item 14. Principal Accounting Fees and Services 189 PART IV

Exhibits and Financial Statement Schedules

Item 15. Exhibits and Financial Statement Schedules 190

Form 10-K Summary

Item 16. Form 10-K Summary 204 Glossary of Select ed Terms 205 i

Business

Item 1. Business PART I FORWARD-LOOKING INFORMATION The Private Securities Litigation Reform Act of 1995 provides a safe harbor to encourage companies to provide prospective information, so long as those informational statements are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those included in the forward-looking statements. Aflac Incorporated and its subsidiaries (the Company) desire to take advantage of these provisions. This report contains cautionary statements identifying important factors that could cause actual results to differ materially from those projected herein, and in any other statements made by Company officials in communications with the financial community and contained in documents filed with the Securities and Exchange Commission (SEC). Forward-looking statements are not based on historical information and relate to future operations, strategies, financial results or other developments. Furthermore, forward-looking information is subject to numerous assumptions, risks and uncertainties. In particular, statements containing words such as the ones listed below or similar words, as well as specific projections of future results, generally qualify as forward-looking. The Company undertakes no obligation to update such forward-looking statements. expect anticipate believe goal objective may should estimate intends projects will assumes potential target outlook The Company cautions readers that the following factors, in addition to other factors mentioned from time to time, could cause actual results to differ materially from those contemplated by the forward-looking statements: difficult conditions in global capital markets and the economy, including inflation defaults and credit downgrades of investments global fluctuations in interest rates and exposure to significant interest rate risk concentration of bu

BUSINESS

ITEM 1. BUSINESS OVERVIEW Aflac Incorporated (the Parent Company) was incorporated in 1973 under the laws of the state of Georgia. The Parent Company and its subsidiaries (collectively, the Company) provide financial protection to millions of policyholders and customers in Japan and the United States (U.S.). The Company's principal business is supplemental health and life insurance products with the goal to provide customers the best value in supplemental insurance products in Japan and the U.S. When a policyholder or insured gets sick or hurt, the Company pays cash benefits fairly and promptly for eligible claims. Throughout its 68-year history, the Company's supplemental insurance policies have given policyholders the opportunity to focus on recovery, not financial stress. The Company has continued to develop and expand its product offerings over time. In Japan, the Company is cultivating an innovation-driven culture to meet the rapidly changing customer and societal needs. In the U.S., the Company continues to make broad-based investments in digital enhancements and innovation within the U.S. platform. In recent years, the Company invested in distribution opportunities through acquisitions and partnerships and pivoted to digital sales methods. For information on the reporting segments see the Result of Operations by Segment section of Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A). The Company is authorized to conduct insurance business in all 50 states, the District of Columbia, several U.S. territories, and Japan. The Company's website is: www.aflac.com. Information included on the Company's website is not incorporated by reference into this filing. The Company makes available free of charge through its website, its annual report on Form 10-K, its quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports as soon as reasonably practicable after they have been electro

Business

Item 1. Business In 1999, the Company had been running commercials for nearly a decade, but its brand awareness was hovering at about 10%. An innovative marketing campaign with something unique and memorable that would build brand awareness was needed. The Aflac Duck's first commercial in the U.S., "Park Bench," aired on January 1, 2000 and taught consumers how to pronounce "Aflac." The Aflac Duck made his international debut in Japan in 2003. In the time since his U.S. debut, the Aflac Duck has become one of the most familiar advertising icons in the world, appearing in many commercials and countless print ads in both the U.S. and Japan. Today, the Aflac Duck is a helpmate who increases brand knowledge and connection. The Company's insurance business consists of two reporting segments: Aflac Japan and Aflac U.S. The primary insurance subsidiary in the Aflac Japan segment is Aflac Life Insurance Japan Ltd. (ALIJ). Aflac U.S. includes the insurance subsidiaries American Family Life Assurance Company of Columbus (Aflac); Continental American Insurance Company (CAIC), branded as Aflac Group Insurance (AGI); American Family Life Assurance Company of New York (Aflac New York); Tier One Insurance Company (TOIC); and Aflac Benefits Solutions (ABS), which provides a platform for Aflac Dental and Vision in the U.S. For information on the Company's results of operations and financial information by segment, see Item 7. MD&A and Note 2 of the Notes to the Consolidated Financial Statements. AFLAC JAPAN Aflac Japan is the principal contributor to the Parent Company's consolidated earnings and the largest insurer in Japan in terms of cancer and medical (third sector insurance products) policies in force. For information on Aflac Japan's operating results, see the Aflac Japan Segment section of Item 7. MD&A. Insurance Products Aflac Japan's third sector insurance products are supplemental products designed to help consumers pay for medical and nonmedical costs that ar

Business

Item 1. Business Other Nursing Care Insurance Aflac Japan's Nursing Care Insurance provides coverage for out-of-pocket costs incurred when receiving public nursing care services. Work Leave Insurance Aflac Japan's Work Leave Insurance offers benefits for relatively short-term hospitalization and home care associated with work leave of less than a year. It is a product that meets the growing need for leave benefits, especially for employees of small and medium-sized companies. First Sector Insurance Products Life Protection-Type Life Insurance Whole Life Aflac Japan launched Prepare Smart Whole-Life Insurance in 2018, a whole life insurance product with low cash surrender value, which offers non-smoking policyholders further discounted premiums, and it provides beneficiaries, typically a designated family member, with a pre-determined benefit payment upon the death of the insured. GIFT GIFT is a term life insurance product that provides a designated family member with a fixed amount of money every month upon a breadwinner's death or serious disability as family support. Savings-Type Life Insurance WAYS and Child Endowment WAYS is an insurance product which has features that allow policyholders to convert a portion of their life insurance to medical, nursing care or fixed annuity benefits at a predetermined age. Aflac Japan's child endowment insurance product offers a death benefit until a child reaches age 18. This product also pays a lump-sum at the time of the child's entry into high school, as well as an educational annuity for each of the four years during his or her college education. In November 2022, Aflac Japan refreshed its WAYS and Child Endowment products and began to actively promote sales of these products after having curtailed sales of both products beginning in 2013. Distribution Channels Traditional Sales Channel This distribution channel includes individual agencies, independent corporate agencies and affiliated corporate age

Business

Item 1. Business Banks Consumers in Japan rely on banks to provide not only traditional bank services, but also as one key source to provide insurance solutions and other services. At December 31, 2023, Aflac Japan had agreements with approximately 90% of the total number of banks in Japan to sell its products. Competitive Markets The Company competes with other insurance carriers through policyholder service, price, product design and sales efforts, as the number of insurance companies offering stand-alone cancer and medical insurance has more than doubled since the deregulation of the Japan market in 2001. However, based on Aflac Japan's size of annualized premiums in force and diversified distribution network, the Company believes it is well-positioned to continue to adapt to increased competition. Furthermore, the Company believes the continued development and maintenance of operating efficiencies will allow Aflac Japan to offer affordable products that appeal to consumers. The Company believes Aflac Japan will remain a leading provider of third sector products such as cancer and medical insurance coverage in Japan, principally due to its experience in the market, well-known brand, low-cost operations, expansive marketing system and product expertise. Government Regulation Financial Services Agency (FSA) The financial and business affairs of Aflac Japan are subject to examination by Japan's FSA. Aflac Japan files annual and interim reports and financial statements for the Japanese insurance operations based on a March 31 fiscal year end, prepared in accordance with Japanese regulatory accounting practices prescribed or permitted by the FSA. Japanese regulatory basis earnings are determined using accounting principles that differ materially from U.S. generally accepted accounting principles (U.S. GAAP). For additional information, see Note 13 of the Notes to the Consolidated Financial Statements. Two FSA regulations applicable to Aflac Japan are outli

Business

Item 1. Business Insurance Products Accident Accident Insurance Aflac U.S. offers accident coverage on both an individual and group basis. These policies pay cash benefits in the event of a covered injury. The accident portion of the policy includes lump-sum benefits for accidental death, dismemberment and specific injuries as well as fixed benefits for hospital confinement. Additional benefits are also available for home modifications, wellness and increased benefits for injuries related to participation in an organized sporting activity. Disability Disability Insurance Aflac U.S. offers short-term disability benefits on both an individual and group basis and long-term disability benefits on a group basis. Critical Care Cancer Insurance Aflac U.S.'s cancer insurance products provide a lump-sum benefit upon initial diagnosis of cancer and subsequent benefits for treatment received due to cancer. Aflac U.S. offers cancer insurance on an individual basis. Critical Illness Insurance Aflac U.S. offers coverage for critical illness plans on both an individual and group basis. These policies are designed to pay cash benefits in the event of critical illnesses such as heart attack, stroke or cancer. Hospital Indemnity Hospital Indemnity Insurance Aflac U.S. offers hospital indemnity coverage on both an individual and group basis. Hospital indemnity products provide policyholders fixed dollar benefits triggered by hospitalization due to accident or sickness. Indemnity benefits for inpatient and outpatient surgeries, as well as various other diagnostic events, are also available. Dental and Vision Dental and Vision Insurance Aflac U.S. offers network dental and vision products on a group basis and fixed-benefit coverage on both an individual and group basis. Aflac Vision Now SM is an individually issued policy which provides fixed benefits for serious eye health conditions and loss of sight as well as coverage for corrective eye materials and exam ben

Business

Item 1. Business independent contractors and are paid commissions based on first-year and renewal premiums from their sales of insurance products. In 2023, the Aflac U.S. sales force included an average of approximately 6,200 U.S. agents, including brokers, who were actively producing business on a weekly basis. For additional information, see the Aflac U.S. Segment subsection of Item 7. MD&A. Consumer Markets While Aflac U.S. primarily markets its insurance products at the worksite, Aflac U.S. is also expanding its distribution strategy to directly reach consumers outside of the traditional worksite through digital lead generation. Competitive Markets Aflac U.S. competes against several supplemental insurance carriers on a national and regional basis. Aflac U.S. believes its policies, premium rates, platforms, value-added services and sales commissions are competitive by product type. Moreover, Aflac U.S. believes that its products are distinct from competitive offerings given its product focus (including features, benefits and claims service model), distribution capabilities and brand awareness. Since Aflac products provide an additional level of financial protection for policyholders, the Company believes the increased financial exposure some employees may face creates a favorable opportunity for Aflac U.S. products. However, given the profitability erosion some major medical carriers are facing in their core lines of business, the Company has seen a more competitive landscape as these carriers seek entry into Aflac's supplemental product segments and leverage their core benefit offerings by bundling and discounting products in order to gain market sh

View Full Filing

View this 10-K filing on SEC EDGAR