Max K. Broden
EVP and Chief Financial Officer at Aflac
Thank you, Dan. This morning, I'm going to address our 2023 results before providing an outlook for certain drivers for 2024 that were included in the slides with our earnings materials filed yesterday with our 8-K. Aflac Incorporated delivered very strong earnings for the year as adjusted earnings per diluted share rose 9.9% to $6.23, the highest amount in our Company's history.
This result included a $0.19 negative impact from foreign currency and variable investment income was $0.14 per share, below our long-term return expectations. In addition, our annual results included remeasurement gains of $0.51 per share, a $0.20 per share non-economic loss in the fourth quarter under US GAAP related to the innovation of our reinsurance treaty with a third-party seeded back to the Company and a $0.04 per share write-off of certain capitalized software development costs in the third quarter.
Our liquidity remains strong with unencumbered holding Company liquidity being $1 billion above our minimum balance. Likewise, our capital position remains strong, and we ended the year with an SMR above 11% in Japan.
At the end of 2023, we estimated our internally modeled ESR to be above 250% and we expect the FSA to provide final guidance on the ESR later in 2024. We also estimate that our combined RBC in the US to be greater than 650% at the end of 2023. These are strong capital ratios, which we actively monitor, stress and manage, twist and credit cycles as well as external shocks. In addition, impairments have remained within our expectations and with limited impact to both earnings and capital.
Our adjusted leverage remains below our leverage corridor of 20% to 25% at 19.7%. And this will fluctuate with the yen-dollar rate, since we hold approximately two-thirds of our debt denominated in yen as part of our enterprise hedging program to protect the economic value of Aflac Japan in US dollar terms.
In 2023, we repurchased $2.8 billion of our own stock and paid dividends of $245 million in Q4, offering good relative IRR on these capital deployments. We will continue to be flexible and tactical in how we manage the balance sheet and deploy capital to drive strong risk-adjusted ROE with a meaningful spread to our cost-of-capital.
Adjusted book value per share increased 10.1% and the adjusted ROE was 13.8%, an acceptable spread to our cost-of-capital. I'm also pleased with our continued development of our Bermuda reinsurance platform, which resulted in three transactions during 2023. We will continue to utilize this platform to better manage risk and improve the capital efficiency across the enterprise. And we expect these transactions to be part of a series that will improve our run-rate adjusted ROE by 100 basis points to 200 basis points over time, all things being equal. Overall, we're very pleased with these results, especially when normalizing for one-time items.
Turning to Aflac Japan, its total benefit ratio for the year was 66%, down 140 basis points from the prior year. Throughout the year, we continued to experience favorable actual to expected on our well-priced large and mature in-force block. We estimate the impact from remeasurement gains to be 130 basis points favorable to the benefit ratio in 2023.
Long-term experience trends, as it relates to treatment of cancer and hospitalization, have continued to lead to favorable underwriting experience. Persistency remained solid with a rate of 93.4% and was down 70 basis points year-over-year, reflecting elevated lapse as customers updated their cancer and medical coverage with our latest cancer and medical products. Our expense ratio in Japan was 19.8%, down 50 [Phonetic] basis points year-over-year, driven primarily by good expense control and to some extent by expense allowance from reinsurance transactions.
For the full year, total adjusted revenues in yen were down 3.6% to JPY1.5 trillion. Net earned premiums declined 5.9% to JPY1.1 trillion yen, reflecting the impact of reinsurance transactions, paid-up policies and deferred profit liability. When excluding these three factors, net earned premiums declined an estimated 1.7%. On this same basis, we would expect net earned premiums in 2024 to decline 2.5% to 1.5% when taking into consideration the impact of reinsurance, paid-up policies and the deferred profit liability reclassification. Adjusted net investment income increased 4% to JPY365.6 billion, as we experienced higher yields on our US dollar-denominated investments and related favorable FX. This was partially offset by transfer of assets due to reinsurance. Pre-tax earnings were JPY456.9 billion or 6% higher than a year ago.
For 2024, we would expect our well-priced in-force to show greater stability in terms of the benefit ratio excluding unlocking and to be in the range of 66% to 68%. This is a function of both favorable morbidity experience and improved mix of business.
With the current trend in revenues, we are actively reducing our expenses. We are taking both tactical efforts as well as more long-term transformational initiatives, and we would expect our expense ratio to be in the range of 19% to 21% going-forward.
The pre-tax profit margin for Japan for 2023 was 30.5%, up 280 basis points year-over-year, a very good result. With approximately 30% of the Japan portfolio in US dollar assets, the strength of the US dollar versus the yen has increased the proportion of net investment income as a component of our pre-tax profit.
With a greater contribution to profitability from net investment income in yen terms, our pre-tax margin is naturally pushed up. In addition, having transitioned to option-based currency hedging, we expect quarterly hedge costs to remain roughly in line with what we experienced in the fourth quarter of 2023. In combination with a lower expected benefit ratio, we expect a pre-tax profit margin of 29% to 31% in 2024.
Turning to Aflac US, our 2023 total benefit ratio came in well below expectations at 42.8%. We estimate that the remeasurement gains impacted the benefit ratio by 500 basis points in 2023. Claims utilization has stabilized, but as we incorporate more recent experienced into our reserve models we unlocked assumptions and released reserves during the year.
Persistency increased 130 basis points year-over-year to 78.6%. This is a function of poor persistency quarters falling out of the metric and stabilization across numerous product categories. Our expense ratio in the US was 40.6%, up 90 basis points year-over-year, primarily driven by our growth initiatives and higher DAC amortization. We would expect the US expense ratio to decrease over time as these businesses grow to scale and improve their profitability.
For the full year, total adjusted revenues were up 2.1% to $6.6 billion. Net earned premiums increased 1.9% to $5.7 billion in 2023. Adjusted net investment income increased 8.6% to $820 million, mainly driven by higher yields on both our fixed and floating-rate portfolios. Pre-tax earnings were $1.5 billion or 10.4% higher than a year ago, driven primarily by the lower benefit ratio which was largely impacted by the third quarter unlock and only partially offset by the higher expense ratio.
For 2024, we would expect net earned premium growth to be in the range of 3% to 5%. Profitability for the US segment was solid with a pre-tax margin of 22.7%, driven primarily by the remeasurement gains from unlocking.
Looking forward at 2024, as we grow products with a higher benefit ratio and lower expense ratio, like group life and disability and network dental and vision, you should start to see those changes reflected in our ratios over time. In 2024, we would expect to operate with a benefit ratio in the range of 45% to 47% and an expense ratio of 38% to 40%. This translates into an expected profit margin of 19% to 21%.
In our corporate segment, we recorded a pre-tax loss of $425 million compared to a loss of $218 million a year ago, primarily due to higher investment tax credits and the impact of the innovation of our reinsurance treaty with a third party. Adjusted net investment income was $54 million lower than last year due to an increased volume of tax credit investments. Higher rates began to earn in and amortized hedge income increased. These tax credit investments impacted the corporate net investment income line for US GAAP purposes negatively by $343 million, with an associated credit to the tax line.
The net impact to our bottom line was a positive $39 million. To date, these investments are performing well and in line with expectations. The impact from the reinsurance innovation was a one-time negative of $151 million.
Overall, we're very pleased with our 2023 million results and our outlook for 2024. I'll now turn the call back to David so we can begin Q&A. David?
