Key Highlights

• Aflac Japan's premium persistency slipped to 92.7% from 93.7%, which management attributed to lapse-and-reissue activity from new product launches.

• Aflac US persistency edged up to 79.4% from 79.2%, while its benefit ratio rose to 49.5% from 47.3% as claims increased.

• Globe Life's life Underwriting Margin rose to 42% of premium, driven mainly by favorable mortality trends rather than improved retention, which management said remained above pre-pandemic levels.

Aflac Incorporated (NYSE:AFL) and Globe Life Inc. (NYSE:GL) both sell regular-premium protection policies whose profits depend on customers continuing to pay for years after an expensive first sale, making policyholder retention central to both companies' economics. Second-quarter 2026 results show retention moving in different ways: Aflac Japan's premium persistency slipped as customers swapped into new products, while Globe Life described renewal lapses as stable but above pre-pandemic levels. Both are S&P 500 constituents in the Life & Health Insurance sub-industry, but their customers, channels and markets differ sharply.

What Persistency Actually Measures

Persistency is the share of premium, or policies, still in force after a period, usually a year; its mirror image is the lapse rate. For insurers that pay commissions and underwriting costs up front, each lapse means those costs are recovered from fewer premiums, and the future profit embedded in the policy disappears.

Aflac sells supplemental cancer, medical and accident cover in Japan and, in the US, largely through employers at the worksite. Globe Life sells basic life and supplemental health policies to lower- and middle-income households through agency divisions such as American Income Life and Liberty National, and through direct-to-consumer marketing.

Aflac (NYSE:AFL) Japan: A Dip Driven by Product Swaps

In the three months to June 30, 2026, reported on August 6, 2026, Aflac's results showed Aflac Japan premium persistency of 92.7%, down from 93.7% a year earlier. Net earned premiums fell 3.7% to ¥245.1 billion and new annualised premium sales fell 5.6% to ¥19.6 billion.

Chief financial officer Max Broden attributed the decline to lapse and reissue activity from recent launches, particularly the Miraito cancer product, and management expects it to normalise as the product matures. The distinction matters: a reissue keeps the customer on a newer policy, whereas a genuine lapse loses them.

Profitability held up. Japan's benefit ratio, meaning claims and benefits as a share of premium, improved to 64.0% from 66.5%, lifting pretax margin to 34.3% from 32.0%. Pretax adjusted Earnings rose 3.4% to ¥118.2 billion.

Aflac (AFL) US: Steady Retention, Rising Claims

Aflac US persistency edged up to 79.4% from 79.2%. The lower level than in Japan reflects the worksite model, where cover is often dropped when an employee changes job. Net earned premiums rose 2.3% to $1.539 billion and sales rose 2.6% to $349 million.

Cross-selling may help retention over time. President Virgil Miller said that for every dollar of dental cover sold, $1.07 of voluntary benefits were also sold.

Claims moved the other way. The US benefit ratio rose to 49.5% from 47.3%, pretax margin fell to 20.9% from 22.5%, and pretax adjusted earnings fell 4.6% to $370 million. At group level, net earnings were $825 million, or $1.63 per diluted share, against $599 million a year earlier.

Globe Life (NYSE:GL): Retention Inside the Margin

Globe Life does not publish a single persistency ratio in its release, so retention must be read through margins and management commentary. In the quarter reported on July 22, 2026, life premium rose 3% to $860.8 million and life underwriting margin rose 6% to $359.4 million, or 42% of premium against 41%.

Chief financial officer Tom Kalmbach said life policy obligations improved to 34.3% of premium from 36.7%, citing favourable mortality trends. The margin gain, in other words, came mainly from fewer claims rather than better retention.

On retention itself, co-chief executive Frank Svoboda said renewal lapses were a little bit higher than they were pre-pandemic and expected them to stay in that range, while first-year lapses at American Income had returned to historical levels. American Income, the largest division, grew life premium 5% to $466.3 million despite a 7% fall in average producing agents to 11,391.

Elsewhere, Direct to Consumer life premium fell 1% and net sales fell 15%, which management linked to lower paid search Volume as consumers use AI tools. Health premium rose 16% to $436.9 million, led by United American, but health obligations rose to 56.8% of premium from 53.3%, above management's estimates.

How Retention Feeds Capital Returns

Stable in-force books generate predictable earnings and capital, which both companies return to shareholders. Aflac bought back $983 million of shares and paid $309 million of dividends in the quarter, and declared a third-quarter Dividend of $0.61 per share.

Globe Life repurchased 1.1 million shares for $175 million and expects full-year Buybacks of $670 million to $700 million. Its board approved a new $2.5 billion repurchase authorisation effective August 15, 2026, and raised full-year 2026 net operating earnings guidance to $15.55 to $15.95 per diluted share.

Risks to the Retention Story

Aflac Japan's persistency may not recover if reissue activity masks genuine competitive losses, and falling yen premiums reduce the base on which future profits rest. Aflac US claims ratios are rising even as retention holds.

At Globe Life, renewal lapses remain above pre-pandemic levels, the agent count has fallen and Direct to Consumer faces structural change in online search. Favourable mortality can reverse, and health obligations already exceeded estimates.

Signals to Watch

Watch Aflac Japan persistency and whether Miraito lapse-and-reissue activity normalises as management expects, alongside Aflac US persistency and the benefit ratio. For Globe Life, the life obligations ratio, renewal-lapse commentary and American Income agent count, where management expects mid-single-digit growth in the second half, deserve attention.