Good morning, everyone. I'm Ryan Krueger from KBW, and we're going to get started with the next session. It's great to have Max Brodén, the CFO of Aflac, up on stage with me. Also wanted to recognize David Young from investor relations and capital markets at Aflac in the front row. Unfortunately, Ben Affleck, their new spokesman, was unable to join us for the fireside this year. Maybe next year. Yeah, maybe just to start off. I'll let him know of the request. Sure, it'll be high priority. Yeah, I just want to start with Japan. Certainly hard to not notice that interest rates are the highest they've been there in 25 years. Yep. And you had done some investment repositioning in the second quarter, and I think you had indicated maybe more in the third quarter. So hoping to get some sense of how much more opportunity there could be to do investment repositioning and take advantage of these higher rates. Yeah. So in Japan, we find ourselves in a situation, obviously, with the yen yield curve being as steep as it is, both in terms of the level of the steepness, but also the absolute levels of yields that we haven't seen for a very long period of time. So what we have been looking at for quite some time, and we've been able to execute on in the second quarter, is a number of repositioning trades. We at Aflac hold a pretty significant U.S. dollar portfolio on our Japanese balance sheet. And what that means is that when we then run this through our capital level in Japan, and when we run this through our local statutory earnings, it creates pretty significant FX, either gains or losses, depending on where the dollar-yen rate is. And as the yen has weakened pretty substantially, despite obviously what's happened over the last week, that means that we have found ourselves in a pretty significant FX gain position. And that's all well and fine, but this coinciding with the steep yield curve has meant that obviously our JGB portfolio has found itself in pretty significant unrealized loss position. And what we've been able to do is to transact and reposition the dollar portfolio generating gains, and reposition the JGB portfolio generating losses. And they more or less offset each other. And that means that without leaking anything in terms of taxes out the company, we've been able to reposition those two portfolios now yielding higher yields. So even though the earnings impact on a local statutory basis is essentially neutral from these transactions, it means that going forward, the net investment income of the total portfolios will be on an annual run rate basis, $50 million higher. The other thing is that it reduces risk overall for us as well. So in Japan, you have an impairment test. So even if it's purely driven by rate, if you are down 50% on a security, you have to impair it for local statutory purposes. And the local statutory earnings is predominantly the main driver for your ability to then send dividends out of that entity up to the holding company. So for us, if you have significant impairment risk, that also means that down the line, there could be impacts to your ability to send dividends. We have greatly, with this, reduced our total unrealized loss on the JGB portfolio, and therefore also significantly reduced that impairment risk as well. This was partly an exercise in reducing future risk, but also an exercise in increasing future earnings. Just to cite, I think it was 5% of your portfolio that you repositioned. Is there an opportunity to do as much as that again, or any sense of the magnitude of the opportunity that's left? Yeah. Transacting 5% of a total portfolio in one quarter is a lot. It's a lot. Our team was very active executing on this. When you start a process like this, you should expect that you begin with what is the most impactful and what is sort of the easiest to do. Some of that is behind us. I definitely expect that our investment team will continue to execute on this in a good way. There is more to come. But just keep in mind that 5% is a very significant number. The higher rate environment is also driving more demand for savings-oriented products in Japan. Yep. You sell a first sector life product called Tsumitasu, which has had good sales growth recently. I guess, can you talk a little more about what your first sector strategy is at Aflac in Japan, the risk-return profile of the Tsumitasu product, and just how much you are willing to grow there relative to your more legacy core third sector business? Yep. I will take the word legacy out. Well, maybe not legacy. Yeah. Our core business, it is really our cancer and medical business in Japan, and our life insurance and our savings business, I would define as more opportunistic. The reason why is because now we are exposing ourselves much more to macro risks. That means that there are times where we want to push the gas, and there are times where we want to hit the brakes. Right now, specifically, I am coming back to not just the yield level, but more importantly is the steepness on the yield curve is making life insurance very attractive from a savings vehicle standpoint in a way that you have not seen for the last 30, 40 years. It is really the steepness that is doing this because most other savings products, like for example CDs or savings accounts, well, they price off of the short end of the yield curve. The life insurance products, they are priced off of the long end of that yield curve. That means that the steepness, that is really what defines the relative competitiveness of these products relative to other savings products. I think from a total demand standpoint, we have a real opportunity in the marketplace right now. That is not just Aflac, that is the whole industry that is benefiting from this. The other angle to it is that the higher yields means that we can now engineer products with actually very good returns. Right now I am seeing new business IRRs that are extremely good for us. We have on top of that also designed over the last couple of years reinsurance solutions and capacity internally that further reduces those returns. When I look at the IRRs on a post reinsurance basis, they are highly attractive. Right now we do want to grow this business. There will be a time where my answer is completely different, and that is what I mean by this being opportunistic. The other angle to it is that Tsumitasu also gives us access to a younger clientele that we can grow into, and that has very significant strategic value to us because that means that a year or two down the line we can then cross-sell our cancer and medical policies into this younger cohort of policy holders. There is both economic and strategic value to grow our life insurance business right now. Shifting to the third sector, you grew sales 24% in 2025. A lot of that was driven by the strength of the Miraito cancer product. Now you have a refreshed medical product too, but you are also lapping the tougher comps with the cancer product. Yep. How are you thinking about sales growth for third sector in the second half of this year? Just any further thoughts on your strategy to grow the third sector business? Yeah. Our cancer product, Miraito, is fully through its refreshment cycle. It has been out in the market for a year and a half at this point. That means that it is meeting that sort of maturity level. We would expect that from a growth standpoint, that will flatten out, and from now on, we are looking for that product to grow a little bit, but defend the levels it is at. As it relates to our medical business, Anshin Palette, we refreshed that product. It came out late last year. We had a full first half with obviously from a growth rate standpoint, very significant growth of that product year-over-year. But in terms of absolute volumes of yen sold, it is still at a pretty low level. That is a business that we really need and want to take to that next level. Historically, I think we have done pretty well selling that product through our exclusive agency channel. We have not done so well selling through the non-exclusive agency channels, and that is actually a part of the marketplace that has grown a lot in medical over the last 10, 15 years. I think that is an opportunity for us to strengthen our positioning in that distribution channel with our medical product. Got it. Third-party reinsurance out of Japan is a newer opportunity for Aflac. You have done one transaction so far with Japan Post. What types of liabilities are you pursuing there? Any early indications on counterparty conversations, and how meaningful do you think this business can become for the company? We would not get into a business unless we think it has the opportunity to become meaningful, not just to Aflac Re, but overall to the totality of Aflac as an enterprise. The liabilities that we are looking for is we have capabilities across the spectrum. That means that we can underwrite, we are willing to take on both biometric risk, longevity risk, and we are willing to take on asset risk as well. If I were to define where I think our sweet spot really lies, it is really in taking on mortality, longevity, and spread risk. This may come a little bit as a surprise to you given that if you think about what Aflac generally is, which is a morbidity company, i.e., we are very, very low morbidity. The fact of the matter is that is what gives us this opportunity. When we commingle our reserve and liability risks that we have, and we are very, very low morbidity, and we add a small level of mortality risk to that balance sheet, we add a small level of longevity risk to that balance sheet, and a small level of spread risk to that balance sheet, we get very significant diversification benefits, both through an economic lens, but also from a regulatory capital lens. That is significant competitive advantage for us. That packaged with us having an A A rating of our reinsurance entity means that we have some real core competitive advantages relative to some other players in Japan. That is something that we are pushing pretty hard on as we continue to have conversations with cedents. Your Japan benefit ratio has been trending towards the higher end of the 60%-63% target for the year. Can you, I guess, go over a little bit more details why that is happening, what your outlook is going forward, and is the general trend of downward movement in the Japan benefit ratio due to favorable claim patterns and mix shift still something you expect longer term? Yeah. I would generally divide our benefit ratio, and here we are talking about Japan for a second. It is a combination of the claims incidence rates that are coming in, and it is a function of what we are seeing on the back book. In our case, lapsation of the back book has a pretty significant impact on our benefit ratio from a quarter-to-quarter basis. When we look at claims trends, they are actually coming in in line with our expectations. In the first half, we have seen a reported U.S. GAAP benefit ratio a little bit higher than what we expected. It is not driven by incidence trends, it is not driven by the severity trends in terms of claims. It is really driven by what is happening on the back book in terms of lapsation. Total lapsation is actually in line with our expectations, but what we have experienced is a little bit higher lapsation of younger policies and a little bit lower lapsation of older policies. Why does this matter? Well, if you have a young policy, that means that, and keep in mind that we are selling regular premium products, that means that the reserve builds up over time. So there is a relatively small reserve that has been built up on, for example, a five-year-old policy that is now lapsing through our results. When that is lapsing and it runs through the results, that full reserve gets released, and if you have a relatively small reserve being released through the benefit ratio, it pushes the benefit ratio only down just a little bit. If you have an old policy that had been on the books for 20, 25, 30 years, there is a very significant reserve that has been built up. That full reserve gets released through the results, pushing down that benefit ratio quite significantly. So that mix impact between old and younger policies being lapsed is really the key component to it. Now, the thing is that when you actually go in and you look at has there been a significant shift in the number of old policies being lapsed, not really, and part of the reason is that the policy per reserve is actually very, very. Sorry, the reserve per policy is very, very high. So it does not take that many policies to not lapse to actually have an impact on our benefit ratio. So that has been a little bit of an impact over the first half. We would expect this to normalize in the second half of the year and going forward. That is why we do expect that for the full year, that our benefit ratio in Japan will still remain at the upper end of our target range of 60%-63%. Got it. I guess there have been some encouraging recent developments in cancer treatment, with the Moderna mRNA vaccine, and there's the Revolution pancreatic cancer drug. I know it's early, of course, but how are you thinking about the potential impacts of those types of advancements if they continue to be successful over the longer term? Medical advancements for treatment of cancer is very important from a societal standpoint, and it's also been very good to us. The way our products are designed is that we pay benefits for a specific trigger or a specific treatment. We don't pay for the treatment. What that means is that if you have more use of new treatments coming in, it generally has meant historically that you have less use of some of the benefits that we have written 20, 25 years ago on our in-force block. What's happened then is that we actually have seen that very favorable claims experience of those older policies being written when there's been new medical advancements or new treatments coming out. What it also means is that it increases demand on the front end to our new policies as we incorporate coverage for these new treatments as well, and that is what's triggering some of this lapse and reissue activity that we talk about pretty much every quarter, that policyholders are refreshing their coverage as well. Generally speaking, we view this as positive drivers, both short-term and potentially even long-term for our business. On expenses in Japan, a couple— Sorry, I do want to mention one more thing. As it relates to when we get more personalized treatments and personalized vaccines, obviously, the cost of that is likely to be quite high. The way our products are designed, we do cover vaccines, but it's a very limited benefit. Generally speaking, I give you one example, that we would have a treatment benefit that may be $200- $300, and it doesn't matter if the vaccine treatment is $500 or if the vaccine treatment is $150,000. We're going to pay the same amount on that. That means that even though the severity or the cost of the treatment is very, very high, it doesn't necessarily hit the severity claims cost for us. Thanks. I had a question on Japan expenses. A couple of years ago, you had guided to a somewhat higher expense ratio going forward as you were making strategic investments in the business. It has ticked up some, but it has still also been trending towards the lower end of the target that you had provided. Can you unpack that a little bit? I assume there's some maybe efficiency actions that are also going on that have kept it lower. There has been, and there's also been good work by. Well, maybe I do hope that our Japan colleagues are listening into this, that they should have some credit for good expense management because it is tough to run a business when you have revenue decline. When you continuously have to cut expenses, it's a difficult environment to operate in. But they've been successful in managing that over time. The other angle to that have also helped is that we've been driving higher net investment income in Japan, relative to the overall income statement. So your proportion of revenues coming from net investment income has increased as yields have increased. That obviously helps your reported expense ratio. Even though we've done some improvements in terms of absolute expense management, that you've had a further benefit pushing the benefit ratio lower by higher net investment income driven by higher yields as well. So, some of that has been given to us, but there's also been good execution. Long term, I do think the right level for our business is in that 20%-23% range. Okay. Then broader question just on AI and how is Aflac going about using AI across the company, and what do you actually think it's going to ultimately result in as a benefit for the company? So obviously we are deploying use cases across the board in many different areas right now. There is a little bit of a shotgun approach. You have to have that at this point in time. We know that some of these use cases will work out really well and some of them will fail. It's important that we get those use cases because we don't know exactly what's going to work and what's not going to work. So it is important to try many different areas, but make sure that we fail fast where it's not working. Fundamentally, I absolutely believe that we will achieve significant operational efficiency driven by AI. There's no doubt about that. I am not convinced that it will lead to expense efficiency, though. And that it will ultimately lead to lower expense ratios for us. When you go back and you look at technology advancements in the past, you have seen significant improvements, but turns out these fantastic technology companies, they want to charge for the products as well. So, it sort of comes through in the shape and form of higher IT expenses overall. So we are not baking on or planning necessarily that we will drive or get significant expense efficiency driven by AI. If we get that'd be fantastic and that would be upside for us, but we are not assuming that that will happen and that sort of will bail us out. If it's one area where I think we and to some extent, the industry could have some pretty good results over the next couple of years, it's really on the policy and administration platform side. So we and the industry generally sit on legacy systems, and what AI technology is really giving you the opportunity is migration off of those systems onto either in-house built solutions or other platforms is going to be a lot less risky, a lot cheaper, and a lot quicker. And when you add those three up, it makes it very, very attractive. So I think when I look at our business today, and from what I've seen in terms of AI use cases that we are deploying, that is probably the area that I think we in the near term, over the next couple of years, probably going to see the most impact. Since I asked about AI, there have started to be some questions from investors about just exposure in the investment portfolio to data centers and hyperscalers. Do you have any update there on Aflac? We hold, if I combine data centers and hyperscalers, they represent about 1% of our investment portfolio, and this is on average single A-rated. The way we think about this is that we have more exposure towards what I would call traditional cloud computing, and less so to data centers in very remote areas that are for single use only. That's something that we are somewhat concerned about, because we don't know necessarily where all these new technology advancements will go. We don't know necessarily what our energy need is five, 10, 15, 20 years from now. And to build that in an area that you don't know if you're going to use it or not, that we find to be maybe a little bit risky. You do need to get pretty significant credit spreads on these type of deals right now. Obviously there's dramatic supply coming onto the market. Generally, I would say that there are some areas where the risk reward is good from a credit standpoint, but there's certainly plenty of areas where it does not look so attractive to us. Moving over to the U.S. business, can you give an update on the progress building your newer product lines, traditional group, dental, vision, direct to consumer, and are those close to reaching scale at this point? We are getting there. We are not there yet. We still need some time. If you ask me, what is some time? Well, it's probably in the two- to three- year timeframe that we need. When it comes to group life and disability, we have a good platform, we have good solutions, and we're happy with how that is progressing. That business is running in line with our expectations, both in terms of what we see in the marketplace, how we price new business, but also how our back book has performed. On dental and vision, obviously, we are behind on our original plan, but as we continue to grow that, we see very good traction, especially as relates in the small case market. That is predominantly driven by our Aflac sales force that is doing very well. A little bit weaker on the broker channel, as that is a much more competitive area. On the direct-to-consumer side, continues to gain traction. Profitability is good on that channel, but we need to sort of push that a little bit harder. We would like to see a little bit more growth come through, but there's also a more direct trade-off between growth and profitability in that channel. As you push for growth, you immediately then eat up higher acquisition expenses that sort of impacts your profitability. You need to be a little bit careful how hard you push in that channel. I think there's the sales side, another initiative has been improving persistency in the U.S. Can you give an update on that and how that's going? Yeah. We're happy with how that is progressing. We've been able to improve that by a couple of —we almost been improving by 20 basis points, 30 basis points per year over the last couple of years. That's progressing well. The real kicker for us is really when we, at greater scale, can bundle multiple products. I think the real area and opportunity for us is on the group side. As we get to fully building out those capabilities and getting to scale in the group business, and we get that bundling happening, that's really when we're going to see the next kicker. When you put it all together, you have a 3%-6% premium growth target in the U.S. over the next few years. How are things tracking towards that? So, obviously, we mentioned on the second quarter earnings call that for this year, we would expect to be slightly below that 3% level. As some of our higher growth areas become a bigger proportion of our total in force and a greater proportion therefore of earned premium, the mix impact as they continue to grow and they become bigger, that naturally pushes us up into that range. So, that is why we feel comfortable about us on a CAGR basis for the years 2025 through 2027, we should still be in that 3%-6% range. But gradually, we would expect that overall earned premium should continue to accelerate throughout that period. At the low end in the beginning of the period and at the higher end at the end of the period. Then on the U.S. expense ratio, it has been trending lower as you have been getting closer to scale in some of the newer businesses, but do you still see more room for improvement there as you reach further scale in the next few years? Yeah. I do. We have, as I mentioned, a number of businesses that are not at scale today, so they are running with expense overruns. As they get to scale, that will bring a tailwind for us, as relates to pushing that expense ratio lower. It is also the fact that we are growing in businesses with a lower expense ratio structurally as well. So that combination of growing in low expense ratio businesses and the mix impact should, over time, continue to further push that expense ratio lower. Got it. Now, at the same time, that also means that our benefit ratio will see the same impact, right? Because we are growing in high- benefit ratio businesses. So, that will have a little bit of an impact pushing that benefit ratio higher. But net- net, that means that we should be able to defend our pre-tax margin in that 17%-20% range. Yeah. There is one more on the benefit ratio. You mentioned the mix shift impact, but if we step back from the mix shift component, how have claims been coming in relative to your expectations there? We generally see actual to expected very much in line with our expectations. There is nothing really that has stood out this year. Last year, we had a little bit higher claims, especially on our accident and our hospital product. That turned out to be a blip, and this year, it is looking better and very much in line with our expectations. So nothing specifically to call out on the claims side. Okay. I wanted to get your current views on M&A. Aflac has never been a company that has really done large M&A transactions, but I think when we look at the company, you do have a lot of characteristics where it would at least theoretically make sense. Strong capital position, low leverage, high valuation multiple, and lower growth. It seems like a company where it could make sense, but I know it's not something you've really done much of. So what are your current views now? Yeah, if you go by the MBA textbook, I would say that we absolutely should make acquisitions because we have all those characteristics. The thing is that you always have to keep in mind that we find ourselves, we are very, very strong in what I would call a pretty narrow niche business. When you are in this very narrow niche at very significant scale, it means that we don't necessarily, for most of the business that we do, we don't need more from a strategic standpoint. We have all of that. We have the products that we need. There are some gaps in terms of capabilities, but this is predominantly more on the technology and the platform side rather than something more bigger, like distribution or product gaps. What that means is that the hurdle rate for us to do any sort of larger M&A is actually quite significant. It also means that the very second that we are looking at something, and most of the things that, trust me, bankers are aware of, they do the same analysis that you just made, right? Yes, we do get approached, and we get pitched a lot of different opportunities. But the problem is that a lot of it is outside of our core business. When we step outside of our core business, that introduces to me a lot more risk because now you're into products that you don't necessarily know or are used to underwrite. You also step into a business that your current management team may not have the capabilities or knowledge how to manage. The risk associated with that type of acquisition is very, very different, especially for a company that does not have the track record and the history of doing so, and I would argue, do not necessarily have that type of acquisitions in its DNA. There are certainly companies that have that, and they're experts in doing so, and that's part of what those companies are. But that is not us, and that's why it means that both from a strategic standpoint, it becomes difficult to find what those right targets are, and it also means that the financial hurdle rate for us may be higher than what it may be for somebody else, despite us having obviously significant financial firepower. Yeah, I guess one follow-up would be, so it sounds like maybe you would consider something if it were right in your niche. But you would have a pretty high hurdle rate to do it because of the execution risk. Yeah, and it would have to advance the ball strategically for us as well. If it is something that is purely financial, it rarely works. Yeah. If it is something that would advance the ball strategically and make the value of Aflac significantly higher, well, of course, we would look at something like that. Got it. Then another new development from last quarter was you announced a new framework for the internal reinsurance limit from Japan to your internal reinsurance company in Bermuda. Can you give a little more color on how did you come up with that amount with the [JFSA], and then should we expect kind of the same type of gradual timing in terms of moving up towards that target like you have been doing in the last five years, or would you ever consider accelerating it to an extent? Yeah. We like to do things on a gradual basis. We initially started with a 10% limit, and that was a meaningful number, but it gave us something to hold on to, something that we could use to communicate to all our different stakeholders. We since then come back, and we looked at what is a more realistic or a reasonable counterparty risk exposure between Aflac Japan and Aflac Re Bermuda, given the size of the balance sheet there, both from a Japan standpoint and an Aflac Re Bermuda standpoint. That's sort of how we landed at this 30%. We also think that it fits the bill in the sense of it being a meaningful number, but it may not necessarily be obviously the end game as well. We don't feel that we have pushed the limit to the extreme by any means, but it's still a reasonable number given where these companies are at this point in time. If Aflac Re Bermuda was a much bigger company, which we would expect over time, that would help that counterparty assessment. It's also the fact that since we introduced this in early July, the JFSA came out with communication where they are now strongly recommending that collateral trusts are part of every reinsurance transaction when you are ceding business. What does a collateral trust do? It sort of increases or reduces the risk overall in the transaction, and it significantly reduces that counterparty risk exposure. In theory, that means that you, over time, could have a greater capacity. These are some of the things that we sort of will evaluate over time. But we just introduced this new limit, and we feel like we have significant runway for the next couple of years. Just a couple on capital. One is, do you still view the underlying free cash flow generation of the company in the $2.5 billion-$3 billion range, but then we should view capital that's freed up through the Aflac Re Bermuda internal transactions as incremental upside to that number? Yeah. That is the way to think about it. It is a good way to sort of think about these sort of different building blocks because the total number will be very volatile over time, but there is an underlying number, and then what we can do, both in terms of internal reinsurance transactions, freeing up capital will come on top of that. I would also recognize that we are currently operating with capital levels in all our legal entities above our target operating ranges. So our ESR is operating above our target operating range, our RBC is operating above the target operating range, and our BSCR is operating above our target operating range. That also gives us opportunity to do further management actions in order to sort of right-size those capital levels. Over time, there is no reason why any of these companies should be above that target operating range for an extended period of time. If that was the case, we should not have defined those target operating ranges in the first place if we did not think that they were actually appropriate. So over time, we would expect that we will be inside of those ranges and possibly in the middle of those. The last piece to it is that we operate obviously with low debt leverage as well. We are at the low end of our leverage corridor. I would argue that we have an overall risk profile that is very low, primarily design driven by the low risk of the underwriting risk that we take on through product design that we have, and that means that, in theory, we should be able to, over time, take on a higher debt leverage than what we have today. So across the board, I think there is certainly more to do for David and his team to continue to drive further efficiencies. Excellent. Well, I think that is a good place to wrap it up. Thank you very much, Max, and the Aflac team for attending. Thank you. Thank you, sir. Very good.