Aflac Incorporated (NYSE:AFL) Q4 2023 Earnings Call Transcript

Operator: The next question comes from Josh Shanker with Bank of America. Please go ahead.

Josh Shanker: Thank you for taking my question. Just a question as to whether or not the yen at ¥140, ¥150 to the dollar versus 110, does that change your hedging costs, your desire to hedge the strategy at all in your investment portfolio?

Max Broden: So obviously, the pricing of options will move, and that impacts, to some extent, the cost of hedging. And so obviously, every input that you would have to the pricing of options would impact that. In terms of the level of the yen, the answer is no. We want to structurally protect the economic exposure we have to the yen. And we do that through the dollar allocation that we have in the general account. We do that through the debt that we issue in yen, and we do that through the forwards that we hold at the holding company, where we are long dollars, short yen. So overall, we do this in order to reduce risk, not necessarily to express an opinion on the yen. Now, how we hedge and protect ourselves, we have all these different levers that we can pull, and the cost and return on capital associated with those can vary over time because of the capital markets.

So that’s why we will then dial up and dial down some of those associated with that. But it’s not necessarily associated with the level of the yen-dollar rate. We are not FX traders. We’re looking to protect ourselves long term.

Joshua Shanker: Thank you very much and have a good day.

Operator: This concludes our question-and-answer session. I would like to turn the conference back over to David Young for any closing remarks.

David Young: Thank you, Betsy, and thank you all for joining us this morning. If you have any additional questions, please reach out to the Investor and Rating Agency Relations team. We will be happy to talk to you then, and we look forward to speaking to you soon. Have a great day.

Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.