Aflac Incorporated opened 2026 with a solid first quarter, reporting net EPS of $1.98 and adjusted EPS of $1.75 (up 6.6% year-over-year ex-currency to $1.77), and returned $1.3 billion to shareholders through $1 billion of buybacks and $315 million of dividends while extending its 43-year record of dividend increases. Aflac Japan sales jumped 25.5% on the strength of new products Anshin Palette, Miraito and Tsumitasu, though yen net earned premiums still declined 3.8% (underlying -1.3%) as management targets the roughly JPY 90 billion of sales needed to reach flat in-force; the CEO would like 2026 sales closer to JPY 80 billion versus JPY 74 billion in 2025. Aflac U.S. grew net earned premiums 3.5% with strong 79.3% persistency and rapid group-business growth, offsetting a slightly down-to-flat core agent channel. Capital remained robust with an ESR of 227% (243% with USP) and combined RBC near 560%. A strategic milestone was the Aflac Re Bermuda assumption of a whole life annuity block from Japan Post, a small but symbolic step in building an external Japan reinsurance franchise expected to become material over time.
Good morning, and welcome. Thank you for joining us for Aflac Incorporated's first quarter 2026 earnings call. This morning, Dan Amos, Chairman and Chief Executive Officer, Aflac Incorporated, will provide an overview of our results and operations in Japan and the United States. Then Max Brodén, Senior Executive Vice President and Chief Financial Officer, Aflac Incorporated, will provide more detail on this quarter's 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., Charles Lake, Chairman and Representative Director, President of Aflac International, Masatoshi Koide, President and Representative Director, Aflac Life Insurance Japan, and Bradley 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 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. Dan?
Thank you, David, and good morning, everyone. We're glad you've joined us. Although we have just one quarter under our belt, the first quarter marked a good start to the year. Aflac Incorporated reported net earnings per diluted share of $1.98 and adjusted earnings per diluted share of $1.75. These results reflect our focused execution of our strategy, thus creating long-term value for our shareholders. Starting with Japan, as you will recall last year, Aflac Japan implemented a marketing and sales transformation which helped deliver the strong results and sales momentum we saw in 2025 and again in this quarter. This transformation was a major strategic initiative driven by Aflac Japan's corporate strategy and marketing and sales team.
I would highlight the leadership of Deputy President Shinsuke Morimoto, First Senior Vice President Michihiro Ito, and Chief Marketing Officer Yumi Saito, working together with Executive Vice President Yoshizumi to make it happen. As a cohesive management team, they delivered strong results. I'm excited about and innovation that they have produced and will continue to bring to the organization moving forward. With this in mind, I'm pleased with Aflac Japan's sales increase of a 25.5% increase for the first quarter. These strong sales results were driven largely by our newest medical product, Anshin Palette and Miraito, our latest cancer insurance product. As part of our ongoing strategy, we continue to emphasize and promote the importance of third sector protection to new and younger customers with our innovative first sector product, Tsumitasu.
The value of our policies resonates with millions of policyholders, and this reinforces how Aflac's overall strategy is effective and reputation is important. 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 in the future. Maintaining strong persistency continues to be important to the future of Aflac Japan. Our broad network of distribution channels, including agencies, alliance partners, and banks, continually leverage opportunities to help provide financial protection to Japanese consumers. For the quarter, all of our distribution channels generated increases in sales, which is significant considering that we prioritize being where the customer wants to buy insurance.
We will continue to evaluate the needs of each channel and support those needs as we work together to provide Japanese citizens with financial protection. Turning to Aflac U.S., I am encouraged by the 2.9% year-over-year increase in sales and the momentum we are seeing within all areas of our group business, especially our group voluntary products. More importantly, we maintain strong premium persistency of 79.3% and increased net earned premium of 3.5% for the quarter. We continue to focus on driving our profitable growth with strong underwriting discipline and maintaining strong premium persistency. We believe this will continue to drive net earned premium growth. At the same time, Aflac U.S. has continued its prudent approach to expense management and maintaining a strong pre-tax margin, as Max will expand upon shortly.
Across Japan and the United States, consumers are feeling the increasing burden of out-of-pocket medical expenses. That's where we step in. Our management teams, employees, and sales distribution partners are united to be there for the policyholders when they need us most. As the pioneer in cancer insurance and a leader in the industry, our team and sales partners show up every day to help ease the burden, providing financial protection with genuine compassion and care. As an insurance company, our primary responsibility is to fulfill the promises we make to the policyholders while being responsive to the needs of shareholders. We generated strong capital and cash flows on an ongoing basis while maintaining our commitment to prudent liquidity and capital management. We continue to be pleased with our investments, producing solid investment income.
Our financial strength is the foundation that backs up our promise to our policyholders, balanced with the financial flexibility and tactical capital deployment. I am very pleased with the company's financial strength, which supports our capital deployment. We treasure our 43 consecutive years of dividend increases and remain committed to extending this record. Combining share repurchase and dividends, we delivered $1.3 billion back to the shareholders in the first quarter. In doing so, we have maintained our position among companies with the highest return on capital and the lowest cost of capital in the industry. In today's complex healthcare environment, Aflac stands out as a trusted partner, combining relevant products, financial strength, a powerful brand, and broad distribution to help consumers manage the financial strain of out-of-pocket medical expenses.
The ongoing foundational strengths of our business and our capacity for continued growth in Japan and the United States, two of the largest life insurance markets in the world, support our leading position and build on our momentum. I will now turn the program over to Max to cover more details of the financial results. Max?
Thank you, Dan. For the first quarter of 2026, adjusted earnings per diluted share increased 6.6% year-over-year to $1.77, excluding effect of foreign currency in the quarter. In this quarter, remeasurement gains on reserves totaled $82 million, reducing benefits by $23 million or $0.04 per diluted share above plan. Variable investment income ran $14 million or $0.02 per diluted share below our long-term return expectations. Adjusted book value per share, excluding foreign currency remeasurement, increased 0.2%. The adjusted ROE was 12.8% and 16.4% excluding foreign currency remeasurement, a solid 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 3.8%.
Aflac Japan's underlying earned premiums, which excludes the impact of reinsurance, paid up policies, and deferred profit liability, declined 1.3%. We believe this metric provides a clearer insight into long-term premium trends. Japan's total benefit ratio came in at 62.9% for the quarter, down 290 basis points year-over-year. We estimate the impact from reserve remeasurement gains exceeding plan to be approximately 70 basis points. We continue to have favorable trends in cancer and hospitalization. While persistency was down, it remains strong and in line with our expectations at 92.8%. We continue to see an uptick in lapse and reissue on our cancer insurance product. Lapses on our first sector savings block remain low and in line with previous periods, despite the increase in yen interest rates.
Our expense ratio in Japan was 19.5% for the quarter, down 10 basis points year-over-year. For the quarter, adjusted net investment income in yen terms was up 4%, primarily driven by higher U.S. dollar fixed rate income on higher volume and higher variable net investment income compared to last year. Partially offset by lower dollar denominated floating rate income due to lower volume and rates, as well as reduced call income. The pre-tax margin for Japan in the quarter was 35%, up 320 basis points year-over-year, a very good result. Turning to U.S. results, net earned premiums were up 3.5%. Premium persistency remains solid at 79.3%.
Our total benefit ratio came in at 47.2%, 50 basis points lower than Q1 2025, driven by favorable incurred claims for individual voluntary benefits products and group disability. We estimate that reserve remeasurement gains impacted the benefit ratio by approximately 230 basis points in the quarter, which is about 80 basis points above plan. Our expense ratio in the U.S. was 38.3%, up 70 basis points year-over-year, primarily driven by higher DAC amortization and commissions, along with timing of advertising and investment spend. Adjusted net investment income in the U.S. was down 0.5% for the quarter, primarily driven by lower short-term rates offset by higher variable net investment income.
Profitability in the U.S. segment was solid with a pre-tax margin of 20.4%, a 40 basis points decrease compared with a strong quarter a year ago. Corporate and other reported break-even pre-tax adjusted earnings, down from a $43 million gain last year, driven by lower adjusted net investment income, higher interest expense and operating costs, and run-off impacts from closed blocks of business. Adjusted net investment income was $17 million lower than last year due to a combination of lower hedge benefits, partially offset by lower volume of tax credit investments. Our tax credit investments impacted the net investment income line for U.S. GAAP purposes negatively by $5 million in the quarter with an associated credit to the tax line. There were no benefit in first quarter earnings from tax credit investments. We're pleased with the overall performance of our investment portfolio.
During the quarter, we recorded $19 million of charge-offs on our loan portfolio. Additionally, we did not foreclose on any properties in the period. We recorded $24 million of impairments on our real estate owned portfolio to reflect the continued depressed valuations in the commercial real estate markets. However, we continue to believe that the current distressed market does not reflect the true intrinsic value of our portfolio, which is why we continue to manage them through this cycle and maximize our recoveries. For U.S. statutory, we recorded $12 million of impairments on invested assets and a $1 million valuation allowance on mortgage loans as an unrealized loss during the quarter.
On a Japan FSA basis, securities impairments reversals led to a net realized gain of JPY 66 million in Q1, and we booked a valuation allowance of JPY 201 million related to transitional real estate loans. This is well within our expectations and has limited impact on regulatory earnings and capital. Effective March 31st, Aflac Re Bermuda entered into a transaction in which it assumed a block of whole life annuities from Japan Post Insurance. This transaction itself is immaterial to Aflac Inc's financials, but it marks a strategic milestone as we expand our reinsurance franchise targeting the Japan market. Aflac Inc unencumbered liquidity stood at $3.4 billion, which was $2.4 billion above our minimum balance of $1 billion at the end of the quarter.
Our adjusted leverage was 21.2% for the quarter, which is within our target range of 20%-25%. As we hold approximately 65% 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 227%. If including the undertaking specific parameter or USP, this would add 16 points to the regulatory ratio and result in an ESR with USP of 243%. We estimate our combined RBC to be approximately 560%.
These are strong capital ratios, which we actively monitor, stress, and manage to withstand market volatility and credit cycles, as well as external shocks. Given the strength of our capital and liquidity, we repurchased $1 billion of our own stock and paid dividends of $315 million in Q1, 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. I will now turn the call back over to David.