---
ticker: AFL
company: Aflac Incorporated
filing_type: 10-K
year_current: 2026
year_prior: 2025
risks_added: 0
risks_removed: 0
risks_modified: 2
risks_unchanged: 25
source: SEC EDGAR
url: https://riskdiff.com/afl/2026-vs-2025/
markdown_url: https://riskdiff.com/afl/2026-vs-2025/index.md
generated: 2026-05-10
---

# Aflac Incorporated: 10-K Risk Factor Changes 2026 vs 2025

> Source: U.S. Securities and Exchange Commission (EDGAR)  
> Generated: 2026-05-10  
> All data extracted directly from official filings. No hallucinated content.

> **[AI-Generated Summary]** The paragraph below was produced by a language
> model and may contain errors. All other content on this page is deterministically
> extracted from the original SEC filing.

> Aflac made minimal structural changes to its Risk Factors section, with 25 risks remaining unchanged while only 2 risks underwent substantive modifications between the 2025 and 2026 filings. The two modified risks addressed catastrophic events' potential impact on the Company's financial condition, results of operations, and infrastructure availability, as well as exposure to yen/dollar exchange rate fluctuations. No new risks were added and no existing risks were removed.

---

## Summary

| Status | Count |
|--------|-------|
| New risks added | 0 |
| Risks removed | 0 |
| Risks modified | 2 |
| Unchanged | 25 |

---

## Modified: Catastrophic events could adversely affect the Company's financial condition and results of operations as well as the availability of the Company's infrastructure and systems.

**Key changes:**

- Reworded sentence: "These catastrophic events may cause changes to estimates of future earnings, capital deployment and other guidance the Company has provided to the markets in the 2026 Outlook section of Item 7."
- Reworded sentence: "While the assessment of risks related to climate change are part of the Company's credit review process, climate change-related risks may adversely impact the value of the securities that 25 25 25 Item 1A."
- Removed sentence: "Risk Factors Item 1A."

**Prior (2025):**

The Company's insurance operations are exposed to the risk of catastrophic events including, but not necessarily limited to, epidemics, pandemics, tornadoes, hurricanes, earthquakes, tsunamis, war or other military action, major public health issues and terrorism or other acts of violence. Claims resulting from natural or man-made catastrophic events could cause substantial volatility in the Company's financial results for any fiscal quarter or year and could materially reduce its profitability or harm the Company's financial condition, as well as affect its ability to write new business. In addition, such events may lead to periods of voluntary or required premium grace periods, which may lead to volatility in lapse rates and related premiums. Any resulting or coincidental economic effects could impact the Company's business, financial condition, results of operations, capital position, liquidity or prospects in a number of ways. These catastrophic events may cause changes to estimates of future earnings, capital deployment and other guidance the Company has provided to the markets in the 2025 Outlook section of Item 7. MD&A. Additionally, the Company's operations, as well as those of its vendors, service providers and counterparties, may be adversely affected by such catastrophic events to the extent they disrupt the Company's physical infrastructure, human resources or systems that support its businesses and customers. Although the Company has a global crisis management framework to minimize the business disruption from a catastrophic event, such framework may not be effective to avoid an adverse impact to the Company from such an event. While the assessment of risks related to climate change are part of the Company's credit review process, climate change-related risks may adversely impact the value of the securities that the Company holds. Climate change may increase the frequency and severity of natural disasters such as hurricanes, tornadoes, floods and forest fires. Further, the Company cannot predict the effects that any legal or regulatory changes made in response to climate change concerns or major public health issues would have on the Company's business. 25 25 25 Item 1A. Risk Factors Item 1A. Risk Factors

**Current (2026):**

The Company's insurance operations are exposed to the risk of catastrophic events including, but not necessarily limited to, epidemics, pandemics, tornadoes, hurricanes, earthquakes, tsunamis, war or other military action, major public health issues and terrorism or other acts of violence. Claims resulting from natural or man-made catastrophic events could cause substantial volatility in the Company's financial results for any fiscal quarter or year and could materially reduce its profitability or harm the Company's financial condition, as well as affect its ability to write new business. In addition, such events may lead to periods of voluntary or required premium grace periods, which may lead to volatility in lapse rates and related premiums. Any resulting or coincidental economic effects could impact the Company's business, financial condition, results of operations, capital position, liquidity or prospects in a number of ways. These catastrophic events may cause changes to estimates of future earnings, capital deployment and other guidance the Company has provided to the markets in the 2026 Outlook section of Item 7. MD&A. Additionally, the Company's operations, as well as those of its vendors, service providers and counterparties, may be adversely affected by such catastrophic events to the extent they disrupt the Company's physical infrastructure, human resources or systems that support its businesses and customers. Although the Company has a global crisis management framework to minimize the business disruption from a catastrophic event, such framework may not be effective to avoid an adverse impact to the Company from such an event. While the assessment of risks related to climate change are part of the Company's credit review process, climate change-related risks may adversely impact the value of the securities that 25 25 25 Item 1A. Risk Factors Item 1A. Risk Factors the Company holds. Further, the Company cannot predict the effects that any legal or regulatory changes made in response to climate change concerns or major public health issues would have on the Company's business.

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## Modified: The Company is exposed to foreign currency fluctuations in the yen/dollar exchange rate.

**Key changes:**

- Reworded sentence: "Due to the size of Aflac Japan, where functional currency is the Japanese yen, fluctuations in the foreign exchange rate between the Japanese yen and the U.S."
- Reworded sentence: "dollar-denominated assets held by Aflac Japan into Japanese yen, which could have a material adverse effect on the Company's business, results of operations or financial condition."
- Reworded sentence: "dollar-denominated investment portfolio creates an unmatched foreign currency exposure and subjects Aflac Japan to volatility in regulatory capital and earnings, which may adversely impact Aflac Japan's ability to 17 17 17 Item 1A."
- Reworded sentence: "dollar-denominated cash flows and earnings when foreign currency exchange gains or losses, respectively, are realized."
- Reworded sentence: "The foreign exchange rates prevailing at the time of dividend payment may differ from the foreign exchange rates prevailing at the time the Japanese yen profits were earned."

**Prior (2025):**

Due to the size of Aflac Japan, where functional currency is the Japanese yen, fluctuations in the exchange rate between the yen and the U.S. dollar can have a significant effect on the Company's reported financial position and results of operations. Aflac Japan's premiums and a significant portion of its investment income are received in yen, and its claims and almost all expenses are paid in yen. Aflac Japan purchases yen-denominated assets and U.S. dollar-denominated assets, which may be hedged to yen, to support yen-denominated policy liabilities. Certain unhedged U.S. dollar denominated assets and liabilities held by Aflac Japan are re-measured to yen with the volatility reported in earnings. Furthermore, the yen-denominated balance sheet of Aflac Japan is translated into U.S. dollars for financial reporting purposes with foreign exchange impact reflected in equity. Accordingly, fluctuations in the yen/dollar exchange rate can have a significant effect on the Company's reported financial position and results of operations. Yen weakening has the effect of suppressing current year results in relation to the prior year, while yen strengthening has the effect of magnifying current year results in relation to the prior year. In addition, the weakening of the yen relative to the U.S. dollar will generally adversely affect the value of the Company's yen-denominated investments in U.S. dollar terms. When the yen strengthens in relation to the U.S. dollar, the yen value of Aflac Japan's unhedged U.S. dollar-denominated investments decreases, resulting in a decrease in Aflac Japan regulatory capital. Further, unhedged U.S. dollar-denominated securities held by Aflac Japan are exposed to foreign exchange fluctuations, which also impact Aflac Japan regulatory capital. As a result, periods of unusually volatile currency exchange rates could result in limitations on dividends available to the Parent Company. The Company engages in certain foreign currency hedging activities to hedge the exposure to yen from its net investment in Japanese operations. These hedging activities are limited in scope, and the Company cannot provide assurance that these activities will be effective. In addition, an increase in the difference between short-term U.S. and Japan interest rates would increase the cost of hedging a portion of the U.S. dollar-denominated assets in the Aflac Japan segment into yen, which could have a material adverse effect on the Company's business, results of operations or financial condition. As indicated in MD&A, the Company has determined that the unhedged U.S. dollar-denominated investment portfolio acts as a natural economic currency hedge of a portion of the Company's investment in Aflac Japan against erosion of economic value. At the same time, the unhedged U.S. dollar-denominated investment portfolio creates an unmatched foreign currency exposure and subjects Aflac Japan to volatility in regulatory capital and earnings, which may adversely impact Aflac Japan's ability to pay dividends to the Parent Company. The Company has historically maintained and currently maintains the size of the unhedged portfolio at levels below the economic equity surplus in Aflac Japan, but there can be no assurance that this strategy will be successful. For regulatory accounting purposes, there are certain requirements for realizing impairments that could be triggered by changes in the rate of exchange between the yen and U.S. dollar and could negatively impact Aflac Japan's earnings and the corresponding dividends and capital deployment. Additionally, the Company is exposed to currency risk when yen cash flows are converted into U.S. dollars, resulting in changes in the Company's U.S. dollar-denominated cash flows and earnings when exchange gains or losses, respectively, are realized. This primarily occurs when Aflac Japan pays dividends in yen to the Parent Company, but it also 17 17 17 Item 1A. Risk Factors Item 1A. Risk Factors has an impact when cash in the form of yen is converted to U.S. dollars for investment into U.S. dollar-denominated assets. The exchange rates prevailing at the time of dividend payment may differ from the exchange rates prevailing at the time the yen profits were earned. The Parent Company utilizes forward contracts to accomplish a dual objective of hedging foreign currency exchange rate risk related to dividend payments by Aflac Japan, and reducing enterprise-wide hedge costs. However, if the markets experience a significant strengthening of yen, this could cause cash strain at the Parent Company as a result of cash collateral and potentially cash settlement requirements. Based on the timing and severity of exchange rate fluctuations combined with the level of outstanding activity in this program, the cash strain at the Parent Company could be significant. For additional information regarding unhedged U.S. dollar-denominated securities, see the risk factor above entitled, "Lack of availability of acceptable yen-denominated investments could adversely affect the Company's results of operations, financial position or liquidity". See the Currency Risk subsection of Item 7A. Quantitative and Qualitative Disclosures about Market Risk for additional information.

**Current (2026):**

Due to the size of Aflac Japan, where functional currency is the Japanese yen, fluctuations in the foreign exchange rate between the Japanese yen and the U.S. dollar have had, and may continue to have, a significant effect on the Company's reported financial position and results of operations. Aflac Japan's premiums and a significant portion of its investment income are received in Japanese yen, and its claims and almost all expenses are paid in Japanese yen. In accordance with U.S. GAAP, the Company translates its Japanese yen-denominated financial statement accounts into U.S. dollars for financial reporting purposes with the resulting foreign currency translation adjustments included in equity. Japanese yen weakening has the effect of suppressing current year results in relation to the prior year, including the resulting negative impact on equity. Japanese yen strengthening has the effect of magnifying current year results in relation to the prior year, including the resulting positive impact on equity. Also in accordance with U.S. GAAP, U.S. dollar denominated assets and liabilities held by Aflac Japan are remeasured to Japanese yen and Japanese yen-denominated assets and liabilities held by Aflac Re are remeasured to U.S. dollar with the resulting foreign currency remeasurement for certain of these assets and liabilities included in earnings. Consequently, fluctuations in the yen/dollar exchange rate have resulted and could continue to result in significant earnings volatility. Japanese yen weakening in relation to the U.S. dollar increases the Japanese yen value on U.S. dollar denominated asset, while Japanese yen strengthening decreases the Japanese yen value of the U.S. dollar denominated assets. In addition, differences between interest rates in Japan and the U.S. can lead to weakening of the Japanese yen relative to the U.S. dollar and could suppress the Company's reported financial position and results of operations relative to the comparable prior period. For regulatory accounting purposes, there are certain requirements for realizing impairments that could be triggered by changes in the yen/dollar exchange rate and could negatively impact Aflac Japan's earnings and the corresponding dividends and capital deployment. The Company engages in certain foreign currency hedging activities to hedge the exposure to Japanese yen from its net investment in Japanese operations. Aflac Japan purchases Japanese yen-denominated assets and U.S. dollar-denominated assets, which may be hedged to Japanese yen, to support Japanese yen-denominated policy liabilities. However, an increase in the difference between short-term U.S. and Japan interest rates would increase the cost of hedging a portion of the U.S. dollar-denominated assets held by Aflac Japan into Japanese yen, which could have a material adverse effect on the Company's business, results of operations or financial condition. As indicated in MD&A, the Company has determined that the unhedged U.S. dollar-denominated investment portfolio acts as a natural economic currency hedge of a portion of the Company's investment in Aflac Japan against erosion of economic value. At the same time, the unhedged U.S. dollar-denominated investment portfolio creates an unmatched foreign currency exposure and subjects Aflac Japan to volatility in regulatory capital and earnings, which may adversely impact Aflac Japan's ability to 17 17 17 Item 1A. Risk Factors Item 1A. Risk Factors pay dividends to the Parent Company. The Company has historically maintained and currently maintains the size of the unhedged portfolio at levels below the economic equity surplus in Aflac Japan, but this strategy may not be successful. Additionally, the Parent Company utilizes forward contracts as part of its Enterprise Corporate Hedging Program to protect the economic value of Aflac Japan in U.S. dollar terms by hedging foreign currency exchange risk related to dividend payments by Aflac Japan. The Company is exposed to currency risk when Japanese yen cash flows are converted into U.S. dollars, resulting in changes in the Company's U.S. dollar-denominated cash flows and earnings when foreign currency exchange gains or losses, respectively, are realized. This primarily occurs when Aflac Japan pays dividends in Japanese yen to the Parent Company, but it also has an impact when cash in the form of Japanese yen is converted to U.S. dollars for investment into U.S. dollar-denominated assets. The foreign exchange rates prevailing at the time of dividend payment may differ from the foreign exchange rates prevailing at the time the Japanese yen profits were earned. If the markets experience a significant strengthening of Japanese yen, this could cause cash strain at the Parent Company as a result of cash collateral and potentially cash settlement requirements. Based on the timing and severity of foreign exchange rate fluctuations combined with the level of outstanding activity in this program, the cash strain at the Parent Company could be significant. These hedging activities are limited in scope and the strategies may not be successful. For additional information regarding unhedged U.S. dollar-denominated securities, see the risk factor above entitled, "Lack of availability of acceptable Japanese yen-denominated investments could adversely affect the Company's results of operations, financial position or liquidity". See the Currency Risk subsection of Item 7A. Quantitative and Qualitative Disclosures about Market Risk for additional information.

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*Data sourced from SEC EDGAR. Last updated 2026-05-10.*