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AFL · AFLAC INC

31 filings

10-K

AFL 10-K Annual Reports

AFLAC INC - 31 annual reports

Filing record · 2016–202610-K1110-Q328-K114

2025
AFLAC INC Annual Report, Year Ended Dec 31, 2025
Aflac Incorporated's 2025 10-K filing reveals a challenging year for the company, marked by a decline in total revenues and net earnings, primarily due to net investment losses. Total revenues decreased by 9.3% to $17.2 billion, and net earnings fell to $3.6 billion ($6.82 per diluted share) from $5.4 billion ($9.63 per diluted share) in the prior year. This performance was significantly impacted by $572 million in net investment losses in 2025, a reversal from the $1.3 billion in net investment gains recorded in 2024. Despite the headwinds, adjusted earnings remained relatively stable at $4.0 billion ($7.49 per diluted share) compared to $4.1 billion ($7.21 per diluted share) in 2024, indicating resilient core operational performance. The company continued its capital return strategy, repurchasing $3.5 billion of its common stock. Shareholders' equity saw an increase to $29.5 billion, supported by favorable changes in discount rate assumptions on insurance reserves, although offset by unrealized losses on investment securities and derivatives. The company also disclosed a cybersecurity incident in June 2025 impacting approximately 22.65 million individuals, though it does not currently anticipate a material financial impact.
Feb 25, 2026
2024
AFLAC INC Annual Report, Year Ended Dec 31, 2024
Aflac Incorporated (AFL) reported solid financial results for the fiscal year ending December 31, 2024. Total revenues reached $18.9 billion, a slight increase from the previous year, while net earnings grew significantly to $5.4 billion, or $9.63 per diluted share, up from $4.7 billion ($7.78 per diluted share) in 2023. This growth was driven by a strong increase in net investment gains, which more than doubled to $1.3 billion. The company also continued its share repurchase program, buying back $2.8 billion of its common stock, and announced a 16.0% increase in its quarterly cash dividend, signaling confidence in its financial health and commitment to returning capital to shareholders. The company's performance was notably impacted by foreign currency fluctuations, with the Japanese yen weakening by 6.9% against the U.S. dollar on average during 2024. While this impacted adjusted earnings per diluted share negatively by $0.18, the company's core operations in both Aflac Japan and Aflac U.S. remain robust. Aflac Japan continues to be the principal contributor to earnings, with a strong focus on its third sector insurance products, while Aflac U.S. shows growth in its product lines and continues to invest in digital enhancements.
Feb 26, 2025
2023
AFLAC INC Annual Report, Year Ended Dec 31, 2023
Aflac Incorporated reported solid financial performance for the fiscal year ending December 31, 2023. Total revenues reached $18.7 billion, with net earnings of $4.7 billion, or $7.78 per diluted share. Adjusted earnings were $3.7 billion, or $6.23 per diluted share, demonstrating the company's ability to manage its core insurance operations effectively. The company returned significant capital to shareholders, repurchasing approximately $2.8 billion of its common stock and increasing its quarterly cash dividend by 19.0% starting in the first quarter of 2024. The company's primary operations in Japan (Aflac Japan) continue to be the main earnings contributor, accounting for 60% of adjusted revenues. While Aflac Japan experienced a slight decrease in net earned premiums due to internal reinsurance transactions and policy maturities, its adjusted net investment income increased, driven by higher yields on U.S. dollar-denominated investments. Aflac U.S. showed growth in net earned premiums across several product lines, including life and disability, and dental and vision, supported by higher interest rates on its investment portfolio. Looking ahead, Aflac is focused on product development and distribution expansion in both markets, alongside technological modernization and operational efficiencies. The company maintains strong capital ratios in both Aflac Japan and Aflac U.S., aiming for a minimum Solvency Margin Ratio (SMR) of 500% for Japan and a combined Risk-Based Capital (RBC) ratio of approximately 400% for the U.S. operations, underscoring a commitment to financial strength and shareholder value.
Feb 22, 2024
2022
AFLAC INC Annual Report, Year Ended Dec 31, 2022
Aflac Incorporated's 2022 10-K filing highlights a year of navigating challenging market conditions, including global economic headwinds and a weakening Japanese yen, which impacted revenues and adjusted earnings. Despite these challenges, the company demonstrated resilience, with net earnings of $4.2 billion and diluted earnings per share of $6.59. A significant portion of the company's operations and assets remain concentrated in Japan, which contributed approximately 69% of total revenues. The company continued its commitment to shareholder returns through share repurchases totaling $2.4 billion and an announced dividend increase. Key financial metrics show a decrease in total revenues to $19.5 billion, while net earnings remained strong at $4.2 billion, reflecting an income tax benefit. Shareholders' equity saw a notable decrease due to unrealized losses on investment securities and derivatives, largely influenced by rising interest rates and foreign currency translation losses. Aflac Japan continues to be the primary earnings contributor, though it experienced a decline in net earned premiums in yen terms. Aflac U.S. showed growth in new annualized premium sales, driven by investments in growth initiatives.
Feb 24, 2023
2021
AFLAC INC Annual Report, Year Ended Dec 31, 2021
Aflac Incorporated's (AFL) 2021 10-K filing reveals a company navigating a dynamic economic landscape, with a primary focus on its established supplemental insurance businesses in Japan and the U.S. Despite a slight decrease in total revenues to $22.1 billion, the company reported net earnings of $4.3 billion ($6.39 per diluted share). Aflac Japan remains the principal contributor to consolidated earnings, showing a 15% increase in pretax adjusted earnings driven by favorable claims experience and improved investment income. Aflac U.S. also demonstrated growth, with a 16.6% increase in pretax adjusted earnings, supported by lower benefit ratios and a rebound in sales activity as the U.S. economy reopened. The company continued its commitment to shareholder returns, repurchasing $2.3 billion of its common stock and increasing its quarterly dividend by 21.2% for the first quarter of 2022. Aflac's investment portfolio, managed conservatively with a focus on fixed maturity securities, remained resilient, with minimal realized losses or impairments related to the COVID-19 pandemic. The company is also actively investing in digital initiatives to enhance efficiency and customer service across both segments.
Feb 23, 2022
2020
AFLAC INC Annual Report, Year Ended Dec 31, 2020
Aflac Incorporated reported total revenues of $22.1 billion for the year ended December 31, 2020, a slight decrease from the previous year, primarily impacted by the global COVID-19 pandemic. Despite revenue pressures, the company demonstrated resilience with net earnings of $4.8 billion, a significant increase driven by a $1.4 billion benefit from the release of valuation allowances on deferred foreign tax credits due to new U.S. tax regulations. The company's core operations in Japan remain the primary driver of earnings, contributing approximately 68% of total revenues and 83% of total assets. Aflac Japan continues to be a leader in cancer and medical insurance, adapting to market trends and focusing on products less sensitive to interest rate fluctuations. Aflac U.S. expanded its product offerings through acquisitions, including group life, disability, and absence management products, and is also enhancing its digital sales capabilities. Navigating the uncertainties of the pandemic, Aflac maintained a strong liquidity and capital position by issuing senior notes and managing its capital allocation tactically. The company is committed to its solvency margin ratios and risk-based capital ratios, with contingency plans in place. While sales were impacted by the pandemic due to reduced face-to-face interactions, Aflac accelerated digital investments to support long-term productivity and customer service.
Feb 23, 2021
2019
AFLAC INC Annual Report, Year Ended Dec 31, 2019
Aflac Incorporated's 2019 10-K filing reveals a company with robust financial performance, driven primarily by its Japanese operations which accounted for 69% of total revenues. Total revenues reached $22.3 billion, with net earnings of $3.3 billion ($4.43 per diluted share). The company demonstrated strong capital positions, with shareholders' equity growing to $29.0 billion, bolstered by a significant net unrealized gain on investment securities. Aflac returned $2.4 billion to shareholders through share repurchases and dividends in 2019, indicating a commitment to shareholder value. A key area of focus for investors is the impact of the Japan Post Group investigation and related sales suspensions, which led to a material decrease in Aflac Japan's sales through this channel, a trend expected to continue in the near term. Despite this challenge, Aflac Japan's core cancer and medical insurance products remain strong. In the U.S., Aflac acquired Argus Dental & Vision, Inc., aiming to expand its dental and vision offerings. The company continues to navigate a complex regulatory environment and manages significant market risks, including interest rate sensitivity and foreign currency fluctuations, particularly the yen/dollar exchange rate.
Feb 21, 2020
2018
AFLAC INC Annual Report, Year Ended Dec 31, 2018
Aflac Incorporated's 2018 10-K filing reveals a company largely driven by its Japanese operations, which accounted for approximately 70% of total revenues and 84% of total assets. The company's core business remains voluntary supplemental health and life insurance in both the U.S. and Japan. Key financial highlights show total revenues of $21.8 billion, a slight increase from the prior year, while net earnings saw a significant decrease to $2.9 billion from $4.6 billion in 2017. This decline is largely attributable to the absence of the substantial tax benefit recorded in 2017 due to the U.S. Tax Act. The company also experienced net realized investment losses of $430 million in 2018, primarily driven by equity security performance and derivative activities. Aflac continues to focus on product innovation, especially in Japan with new cancer and medical insurance offerings, and on expanding its distribution channels in the U.S. through group products and broker relationships. The company repurchased approximately $1.3 billion of its common stock in 2018. A significant strategic development mentioned is Japan Post Holdings' plan to purchase approximately 7% of Aflac's outstanding common shares, subject to regulatory approvals. The company's financial condition is noted as strong, with robust capital and liquidity levels, although it faces ongoing risks related to global capital markets, interest rate fluctuations, foreign currency exchange rates, and intense competition.
Feb 25, 2019
2017
AFLAC INC Annual Report, Year Ended Dec 31, 2017
Aflac Incorporated's (AFL) 2017 10-K filing reveals a robust financial performance driven by its two primary segments: Aflac Japan and Aflac U.S. The company reported total revenues of $21.7 billion and net earnings of $4.6 billion. A significant factor influencing the net earnings was the U.S. Tax Act, which provided an estimated $1.9 billion benefit due to the reduction in the U.S. federal corporate income tax rate. Aflac Japan continues to be the dominant segment, accounting for approximately 70% of total revenues and 83% of total assets. The company is actively pursuing the conversion of Aflac Japan from a branch to a subsidiary structure, anticipating completion in early 2018, which is expected to offer enhanced flexibility in capital management and business development. The U.S. operations showed steady growth, with new annualized premium sales increasing, supported by expanded product offerings and a more streamlined distribution strategy. Key financial highlights include strong capital positions and continued dividend payments to shareholders, with a notable increase in the quarterly cash dividend. The company remains focused on disciplined asset-liability management and adapting to evolving market conditions, particularly in Japan's low-interest-rate environment.
Feb 23, 2018
2016
AFLAC INC Annual Report, Year Ended Dec 31, 2016
Aflac Incorporated's 2016 10-K report reveals a company with a strong financial footing, heavily reliant on its Japanese operations which contributed 71% of total revenues. The company reported an 8.1% increase in total revenues to $22.6 billion, with net earnings of $2.7 billion, or $6.42 per diluted share. This performance was supported by a strengthening yen, which positively impacted the translation of yen-denominated results into U.S. dollars. Despite a challenging low-interest-rate environment, particularly in Japan, Aflac continued to manage its investment portfolio by increasing allocations to higher-yielding asset classes while maintaining adherence to strategic asset allocation. A key strategic initiative highlighted is the planned conversion of Aflac Japan from a branch structure to a subsidiary, expected to be completed in mid-2018. This move is anticipated to provide enhanced flexibility in capital management and business development, while remaining tax-neutral and not materially impacting daily operations. Aflac also actively engaged in share repurchases, returning significant capital to shareholders through dividends and buybacks, underscoring a commitment to shareholder value. The company highlighted its strong capital position, with a robust Risk-Based Capital (RBC) ratio in the U.S. and a high Solvency Margin Ratio (SMR) in Japan, indicating financial strength and operational stability.
Feb 24, 2017
2015
AFLAC INC Annual Report, Year Ended Dec 31, 2015
Aflac Incorporated's 2015 Form 10-K highlights a year of financial resilience, marked by a 8.2% decrease in total revenues to $20.9 billion, primarily driven by the weakening Yen. Net earnings for the year were $2.5 billion, translating to $5.85 per diluted share. The company continued its focus on its core supplemental health and life insurance business, with Japan accounting for a significant portion of its revenues and assets. Aflac also actively managed its capital through share repurchases and debt management. The company faced a challenging macroeconomic environment, including global capital market volatility and the persistent low-interest-rate environment, which impacted investment income. Despite these headwinds, Aflac's operational segments in both Japan and the U.S. demonstrated stable performance. The company's robust risk management framework and strong capital position provided stability throughout the year, and management remained optimistic about future growth prospects, particularly in its less interest-rate-sensitive third-sector products in Japan.
Feb 25, 2016
2014
AFLAC INC Annual Report, Year Ended Dec 31, 2014
Aflac Incorporated's 2014 Form 10-K highlights a year of resilience amidst a weakening yen, reporting total revenues of $22.7 billion and net earnings of $3.0 billion. The company's operations are heavily concentrated in Japan, which accounted for 72% of total revenues and 82% of total assets in 2014. Aflac Japan's performance was impacted by the yen's depreciation against the U.S. dollar, leading to a reported decrease in dollar-denominated revenues and net earnings compared to 2013. However, on a yen-operating basis, Aflac Japan showed stable pretax operating earnings, driven by strong performance in its core cancer and medical insurance products, with the introduction of the "New Cancer DAYS" product showing promising early results. In the U.S., Aflac U.S. demonstrated moderate growth in premium income and pretax operating earnings, supported by product enhancements and strategic sales initiatives. The company continued its share repurchase program, returning $1.2 billion to shareholders through repurchases and dividends in 2014. Aflac's strong capital position and robust risk management framework are key strengths, with the company maintaining high solvency margin ratios and regulatory capital levels in both its U.S. and Japanese operations. The report also details the company's exposure to market risks, particularly currency fluctuations and interest rate sensitivity, and outlines its hedging strategies to mitigate these risks.
Feb 26, 2015
2013
AFLAC INC Annual Report, Year Ended Dec 31, 2013
Aflac Incorporated's 2013 10-K report highlights a company heavily reliant on its Japanese operations, which contributed 74% of total revenues and 85% of total assets. The company's net earnings for 2013 were $3.2 billion, or $6.76 per diluted share, showing an increase from the previous year. Despite a challenging economic environment and the negative impact of a weaker yen on reported revenues, Aflac demonstrated resilience, particularly in its core insurance businesses. The company continues to diversify its product offerings in both Japan and the U.S. Aflac Japan focuses on supplemental health and life insurance, with cancer and medical products remaining strong performers, while Aflac U.S. offers similar voluntary insurance policies alongside group products. The company actively manages its investment portfolio, which primarily consists of fixed-income securities, and engages in hedging activities to mitigate currency and interest rate risks. Shareholder returns were supported by share repurchases totaling $800 million and consistent dividend payments.
Feb 27, 2014
2012
AFLAC INC Annual Report, Year Ended Dec 31, 2012
Aflac Incorporated's 2012 10-K filing reveals a company heavily reliant on its Japanese operations, which accounted for 77% of total revenues and 87% of total assets in 2012. Despite a challenging global economic environment, Aflac Japan demonstrated robust sales growth, driven significantly by its banking channel partnerships and the WAYS product. In the U.S., Aflac U.S. saw modest premium income growth and continued to expand its broker and group insurance offerings. The company's financial performance showed a substantial increase in net earnings and diluted EPS in 2012 compared to 2011, partly due to lower net realized investment losses. Aflac continued its commitment to shareholder returns through dividends and share repurchases. Key risks highlighted include exposure to global capital markets, the concentration of business in Japan, and the impact of foreign currency fluctuations, particularly the yen-dollar exchange rate.
Feb 27, 2013
2011
AFLAC INC Annual Report, Year Ended Dec 31, 2011
Aflac Incorporated's 2011 annual report (10-K) highlights a year of revenue growth driven by a stronger Japanese Yen, though net earnings saw a decline primarily due to significant realized investment losses. The company's core business remains robust, with strong performance in its Japan segment contributing the majority of revenues and assets. Aflac Japan continues to lead in cancer and medical insurance sales, benefiting from an aging population and increased consumer interest in supplemental health products, alongside a growing contribution from the bank distribution channel. The U.S. segment also experienced sales growth, driven by a focus on field force support and product enhancements. Risks highlighted include adverse effects from global capital market and economic conditions, potential impairments on investment portfolios, and regulatory changes. The company continues to manage its investment portfolio by strategically reducing exposure to peripheral Eurozone countries and perpetual securities. Despite these challenges, Aflac maintains a strong capital and solvency position, supported by consistent premium growth and a diversified investment strategy.
Feb 27, 2012
2010
AFLAC INC Annual Report, Year Ended Dec 31, 2010
Aflac Incorporated's 2010 10-K filing reveals a strong financial performance, driven significantly by its Japanese operations which constituted 75% of total revenues and 86% of total assets. The company reported total revenues of $20.7 billion, a 13.6% increase from the previous year, and net earnings of $2.3 billion, or $4.95 per diluted share, up from $1.5 billion in 2009. This growth was supported by a stronger yen and lower realized investment losses compared to the prior year. Despite facing economic headwinds, Aflac maintained a robust capital position and continued to invest in its distribution network in both the U.S. and Japan. The company's U.S. operations showed modest growth, with total operating revenues of $5.1 billion. While the U.S. segment faced challenges due to the economic climate, Aflac implemented strategies to enhance its sales force and expand its broker distribution channels. The filing also details the company's investment portfolio, its management of market risks including currency and interest rate fluctuations, and its adherence to regulatory requirements in both operating jurisdictions.
Feb 25, 2011
2009
AFLAC INC Annual Report, Year Ended Dec 31, 2009
Aflac Incorporated's 2009 10-K filing reveals a robust financial performance, largely driven by its significant operations in Japan, which contributed approximately 73% of total revenues and 85% of total assets. Despite challenging global economic conditions, the company demonstrated resilience with total revenues increasing to $18.3 billion and net earnings reaching $1.5 billion. However, the company incurred significant net realized investment losses of $1.2 billion in 2009, primarily due to other-than-temporary impairments totaling $1.4 billion. These impairments were largely concentrated in perpetual securities, corporate bonds, and collateralized debt obligations. Management highlighted a strategic focus on strengthening its capital position through debt issuance and suspending stock repurchases. The company also continues to diversify its product offerings in both its U.S. and Japan segments, with particular emphasis on enhanced medical and life insurance products in Japan and streamlined accident and cancer plans in the U.S. The report also notes the ongoing impact of healthcare reform discussions in the U.S. and the company's strong solvency ratios in Japan.
Feb 26, 2010
2008
AFLAC INC Annual Report, Year Ended Dec 31, 2008
Aflac Incorporated's 2008 10-K filing reveals a company significantly influenced by global economic conditions, particularly in its key markets of Japan and the United States. Despite a challenging economic environment in 2008, marked by widespread financial market disruption and recessionary fears, Aflac demonstrated resilience. The company's strong presence in Japan, accounting for over 70% of revenues and a majority of assets, played a crucial role. Aflac Japan continued to show robust growth in premium income, driven by strong demand for its cancer and medical insurance products, supported by strategic distribution initiatives like partnerships with banks and the Japan Post Network. In the U.S., while sales were impacted by the economic slowdown, Aflac maintained its focus on its core worksite marketing strategy and strengthening its sales force. The company's investment portfolio, heavily weighted towards debt and perpetual securities, experienced valuation declines due to market volatility, leading to significant realized investment losses in 2008, primarily from impairments on financial institution investments and other distressed assets. However, the company maintained strong capital ratios and liquidity throughout the year.
Feb 20, 2009
2007
AFLAC INC Annual Report, Year Ended Dec 31, 2007
Aflac Incorporated (NYSE: AFL) closed 2007 with net earnings of $1.634 billion, or $3.31 per diluted share, up about 12% from $2.95 in 2006. Total revenues rose 5.3% to $15.4 billion, driven by premium growth of 5.4% to $12.97 billion and net investment income of $2.33 billion. The company met its 2007 objective of 15-16% growth in per-share earnings on the company's adjusted basis. Aflac Japan remains the dominant engine, generating 71% of 2007 revenues and holding 82% of total assets, so the stock's fortunes are closely tied to Japan's economy, the yen/dollar exchange rate, and Japanese insurance regulation. The key operating story is steady growth in both segments. Aflac Japan's pretax operating earnings rose 10.2% in dollars to $1.82 billion, helped by an improving benefit ratio, though yen-denominated new annualized premium sales fell 2.4% as the stand-alone medical market weakened. Aflac U.S. was the standout, with pretax operating earnings up 18.3% to $692 million and new annualized premium sales up 9.5%. Management guided to 13-15% EPS growth for 2008 and expects Aflac Japan's profit margins to keep expanding, while noting that the strong yen at year-end inflated reported balance sheet figures. Capital return and balance-sheet risk both matter to investors. Cash returned to shareholders through buybacks and dividends reached $979 million, and the board authorized an additional 30 million shares in January 2008. A February 2008 accelerated share repurchase of 12.5 million shares for $757 million is expected to settle in the second quarter. Quarterly dividends were raised to $0.24 for 2008. Investment-quality metrics remained solid overall, with 97.7% of U.S. debt holdings and 99%+ of Japan holdings in investment-grade securities, but unrealized losses of about $2.1 billion and roughly $1 billion of below-investment-grade bonds warrant monitoring given the 2007 credit market stress.
Feb 29, 2008
2006
AFLAC INC Annual Report, Year Ended Dec 31, 2006
Aflac Incorporated's 2006 Form 10-K filing reveals a company with robust performance driven significantly by its Japanese operations, which accounted for approximately 72% of total revenues. The company demonstrated stable premium income growth in both its U.S. and Japanese segments, with a notable increase in U.S. sales figures, exceeding internal objectives. Financially, Aflac reported strong net earnings, consistent with the previous year, and maintained a solid capital and surplus position. The company's investment portfolio remains a key asset, though it notes the impact of low interest rates on investment income. Management is focused on operational efficiency, sales force development, and product innovation across both major markets. The filing also highlights the company's commitment to shareholder returns through dividends and share repurchases, reinforcing its stable financial health.
Feb 28, 2007
2005
AFLAC INC Annual Report, Year Ended Dec 31, 2005
Aflac's 2005 10-K shows a financially strong year: net earnings rose 17.2% to $1.48 billion ($2.92 diluted EPS, up from $2.45), total revenues reached $14.4 billion, and shareholders' equity grew to $7.9 billion. Results were boosted by $262 million of pretax realized investment gains, largely from bond swaps that used tax loss carryforwards, plus a $34 million tax benefit from releasing a valuation allowance. Management's objective of at least $2.56 EPS for 2005 was met after adjusting for these items. Underlying growth came from Aflac Japan, which generated 74% of revenues, and from Aflac U.S., where premiums in force rose 10%. The main risks for investors are concentration and currency. Aflac Japan holds 82% of total assets, so the Japanese economy, the yen/dollar rate, and the company's ability to repatriate profits all carry significant weight. The yen weakened about 11.7% against the dollar at year-end, which cut reported assets by $5.7 billion, although management views translation as an accounting effect rather than an economic one. Investment yields are also under pressure: Aflac Japan's new-money yield is about 3%, and the portfolio yield fell to 4.22%, which narrows the spread against required interest on policy reserves. Looking ahead, management set 2006 targets of at least $2.92 diluted EPS (15% growth), 5% to 8% yen growth in Japanese new sales, and 8% to 12% growth in U.S. new sales. The board also authorized an additional 30 million share repurchases and raised the quarterly dividend to $0.13. Management expects Rider MAX sales to keep declining, which makes the medical product line increasingly important to Japanese growth.
Feb 28, 2006
2004
AFLAC INC Annual Report, Year Ended Dec 31, 2004
Aflac's 2004 10-K shows a strong year for the company, with net earnings rising to $1.299 billion ($2.52 per diluted share) from $795 million in 2003. That figure is flattered by non-recurring items: a $128 million tax benefit from releasing a valuation allowance (after the American Jobs Creation Act eliminated the foreign tax credit limitation), a $6 million pension gain, and a $39 million favorable currency translation effect. Excluding these and realized investment losses, management's operating view is more modest. Total revenues grew 16% to $13.3 billion, premiums rose 14% to $11.3 billion, and total assets reached $59.3 billion. Shareholders' equity grew to $7.6 billion. Aflac Japan remains the dominant engine, generating 75% of revenues, 80% of assets, and most pretax operating earnings ($1.4 billion of $1.8 billion). Its growth is substantially sensitive to the yen/dollar rate, which strengthened to 104.21 at year-end from 107.13, and its new annualized premium sales rose only 1.1% in yen terms, below management's expectations. Aflac U.S. grew more slowly: new sales rose 5.1%, its benefit ratio is edging up, and new money yields in the U.S. are below required interest on reserves, a spread pressure management flagged explicitly. Investment yields are declining across both segments, which management expects to continue to weigh on margins. For investors, the key forward items are management's 2005 EPS objective of at least $2.56 (14.8% growth, assuming SFAS 123R adoption and no currency effect), the decline in Japanese investment spreads, the reliance on Japanese profit repatriation (remittances fell to $220 million from $385 million), and the concentration of risk in yen-denominated assets and liabilities. Credit quality remains high, with 98.3% of Aflac Japan's fixed maturities investment grade.
Mar 10, 2005
2003
AFLAC INC Annual Report, Year Ended Dec 31, 2003
AFLAC's 2003 10-K shows a company whose earnings were pressured in 2003 by one-time investment losses, even as its core business kept growing. Net earnings fell 3% to $795 million ($1.52 per diluted share) from $821 million ($1.55) in 2002. The decline came mainly from $301 million in pretax realized investment losses, chiefly the sale of its Parmalat holding (a $257 million pretax loss) and Levi Strauss (a $38 million loss). Excluding these items, management's measure of pretax operating earnings rose 19.8% to $1.53 billion. Total revenues grew 11.6% to $11.4 billion, with premiums of $9.9 billion, and earned premiums rose across both segments. AFLAC Japan remains the dominant engine, generating 74% of 2003 revenues and 84% of total assets. Its pretax operating earnings grew 21.6% in dollar terms, helped by a stronger yen (107.13 per dollar at year-end versus 119.90 a year earlier) and a steady rise in premiums in force. AFLAC U.S. grew more modestly, with pretax operating earnings up 12%, and sales growth slowed to 5.4%, which management called disappointing. Management responded by expanding its sales-management infrastructure. Net investment income was essentially flat at about $1.8 billion because of low new-money yields, a trend that will keep pressuring spreads as high-yielding bonds mature. For investors, the key points are the quality of the core franchise, the sensitivity to the yen, and the outlook. Management guided to 2004 net earnings of at least $2.21 per diluted share, a 17% increase, assuming no realized investment losses and no currency effect. Balance-sheet strength is solid: shareholders' equity reached $6.6 billion, debt to capitalization was 24.6%, and the company repurchased $343 million of stock and raised its dividend 30% to $0.30 per share. Risks to monitor include below-investment-grade holdings that rose to $1.1 billion, falling investment yields, and reliance on Japanese policy and currency conditions.
Mar 11, 2004
2002
AFLAC INC Annual Report, Year Ended Dec 31, 2002
AFLAC's 2002 results were strong on the metrics management emphasizes. Net earnings rose 19.5% to $821 million ($1.55 per diluted share, up 21.1%), while operating earnings per diluted share grew 16.4% to $1.56, or 17.9% excluding yen/dollar translation effects, beating management's 15% target. Growth was driven by AFLAC Japan, which contributed about 75% of total revenues and 84% of total assets. Japan's pretax operating earnings rose 13.9% in dollars to $938 million, supported by a falling benefit ratio, a 17.9% rise in new annualized premium sales in yen, and high persistency. AFLAC U.S. also grew, with pretax operating earnings up 16.7% to $402 million on a 16.4% increase in new annualized premium sales. The main headwinds are the low-yield environment and the cost of Japan's policyholder protection fund. Net investment income was essentially flat at about $1.6 billion for three years, and the portfolio yield is declining as higher-yielding securities mature. Japan's industry-wide policyholder protection fund assessment reduced 2002 net earnings by $26 million ($0.05 per share). Impairment losses of $58 million and a weaker yen also weighed on results. Management targets 15% to 17% growth in operating EPS for 2003 excluding currency effects, with a specific goal of at least $1.80 per diluted share. Balance sheet growth was substantial. Total assets rose to $45.1 billion from $37.9 billion, largely because of the stronger yen, and shareholders' equity increased to $6.4 billion. The company repurchased $346 million of stock and raised dividends 19% to $0.23 per share. Investors should watch the yen/dollar exchange rate, Japan's weak economy and deregulated competitive environment, the pace of repatriating profits from Japan, and the declining yield on the investment portfolio.
Mar 27, 2003
2000
AFLAC INC Annual Report, Year Ended Dec 31, 2000
AFLAC Incorporated's 2000 Form 10-K shows a company whose growth engine is its Japanese cancer insurance business. Net earnings rose 20.3% to $687 million ($1.26 diluted EPS, before the 2-for-1 split effective March 16, 2001), while operating earnings grew 19.4% to $657 million ($1.20 diluted operating EPS). AFLAC Japan generated 81% of total revenues and 86% of total assets, and its pretax operating earnings rose 18.6% to $771 million. Management exceeded its 17% operating EPS growth goal, reporting 18.0% growth excluding currency effects. Total revenues reached $9.72 billion, premium income was $8.24 billion, and shareholders' equity rose 21% to $4.69 billion, helped by a $1.47 billion unrealized gain on investments. The main risks for investors are concentrated in Japan and in its investment portfolio. Japan's weak economy keeps new-money yields low, with AFLAC Japan's new-money rate at 3.78% versus a 4.82% overall portfolio return. The company is also exposed to yen/dollar translation: the yen weakened 10.8% at year-end, which reduced reported assets by $3.6 billion. Management is preparing for increased competition in Japan's third sector, as additional insurers can sell cancer products starting January 2001 and all insurers may compete by July 2001. Two credit downgrades produced a $58 million after-tax loss in 2000. Japan's deregulation and a $157 million profit repatriation, below the $351 million maximum, also bear watching. Management guided for 15% to 17% operating EPS growth in 2001 and 2002 excluding currency effects, and expects the high end for 2001. The company also recorded a one-time $99 million after-tax benefit from releasing an unfunded retirement liability in 2000, which flatters reported earnings relative to operating earnings. Investors should weigh strong operating momentum against this dependence on a single foreign market, currency swings, and the rising competition that management itself anticipates.
Mar 28, 2001
1999
AFLAC INC Annual Report, Year Ended Dec 31, 1999
AFLAC Incorporated's 1999 results show a strong year driven by its Japanese supplemental health business. Total revenues rose 21.6% to $8.64 billion and net earnings rose 17.4% to $571 million ($2.15 basic / $2.07 diluted EPS). Operating earnings, which exclude realized investment losses, the Japanese policyholder protection fund charge, and the Japanese tax-rate benefit, grew 28.1% to $550 million, or $2.00 per diluted share, and operating EPS growth excluding currency effects was 20.5%, beating the company's 20% goal. Much of the reported growth was amplified by a stronger yen (average rate 113.96 vs. 130.89), which added about $0.12 to operating EPS. AFLAC Japan is the core of the business, generating 81% of revenues and 87% of total assets. Japanese premium income rose 24.6% in dollars to $5.9 billion, and new annualized premium sales in yen grew 15.6%. Cancer insurance remains the leading product, with 13.4 million policies in force. Investors should note several risks: the Japanese economy remains weak, the Toho Mutual insolvency led to a new $64 million pretax charge, Japanese deregulation takes effect January 1, 2001 and will bring new competitors into the third sector, and the company's investment portfolio is concentrated in Japanese and private placement debt, with $530 million of below-investment-grade holdings. Debt rose sharply, with the debt-to-capitalization ratio increasing to 28.1% from 19.6%, as the company issued $450 million of 6.5% senior notes and borrowed to fund share repurchases. The balance sheet remains strong, with shareholders' equity of $3.87 billion ($14.56 book value per share), an NAIC risk-based capital ratio above regulatory action levels, and ratings of AA (S&P) and Aa3 (Moody's). The company also guided to a 2000 objective of 15%-17% operating EPS growth excluding currency effects, with a 17% increase implying about $2.34 per diluted share at the 1999 average exchange rate.
Mar 27, 2000
1998
AFLAC INC Annual Report, Year Ended Dec 31, 1998
AFLAC's 1998 results were driven by strong growth in operating earnings, despite a sharp decline in reported net earnings. Operating earnings per diluted share rose 17.3% to $1.56 (21.1% excluding currency effects), beating the company's 20% growth target, and pretax operating earnings grew 10.1% to $664 million. Reported net earnings fell 16.8% to $487 million ($1.76 diluted EPS) because 1997 included a $211 million after-tax gain from selling the television business, and 1998 included a $111 million pretax charge for Japan's mandated policyholder protection fund. A $121 million one-time deferred tax benefit from Japan's corporate tax rate cut partly offset these items. AFLAC Japan remains the core of the business, accounting for 80% of 1998 revenues and 86% of total assets. Its operating earnings were roughly flat in 1998 (down 0.4%) as the weak yen and a sluggish Japanese economy weighed on results, while AFLAC U.S. grew pretax operating earnings 24.9% to $230 million. Investors should note the concentration risk in Japan: the weak economy, low investment yields, potential deregulation after 2001, and the January 1999 downgrade of a Japanese bank holding ($454 million, now Ba1/BB+) all bear on the outlook. Management guided to 20% operating EPS growth in 1999 excluding currency effects, a 10-15% increase in Japanese yen sales, and a further Japanese tax rate cut to 36.2% that is expected to shift tax expense to the U.S. rather than reduce consolidated taxes. The balance sheet is strong: shareholders' equity rose to $3.77 billion, the company holds $27.0 billion in investments and cash, and debt-to-capitalization was 19.6%. Share repurchases continued (about 7.4 million shares remain authorized), and the dividend rose to $.065 quarterly. The company also disclosed Year 2000 remediation work that is largely complete, with remaining risk concentrated in premium payment systems at Japanese corporate customers.
Mar 26, 1999
1997
AFLAC INC Annual Report, Year Ended Dec 31, 1997
AFLAC Incorporated's 1997 10-K shows a company whose earnings were boosted by a one-time event but whose core engine is its Japanese cancer-insurance franchise, which is exposed to yen weakness and a sluggish Japanese economy. Reported net earnings rose 48.3% to $585.0 million ($4.16 diluted EPS), but this includes a $211.2 million after-tax gain ($1.50 per diluted share) from the sale of the broadcast business. Pretax operating earnings, which exclude realized investment gains/losses and television-sale gains, grew only 2.6% to $603.0 million, and operating EPS rose 10.8% to $2.66 as reported, or 18.3% excluding currency effects. AFLAC Japan, which generated 79% of total revenues and 87% of total assets, saw its pretax operating earnings fall 5.4% in dollar terms as the yen weakened from 108.84 to an average of 121.07 per dollar. Growth is concentrated in the U.S. segment, where pretax operating earnings jumped 43.4% to $184.3 million, aided by record profit repatriations of $347.0 million from Japan and investment income from the television sale proceeds. Management raised its 1998 operating EPS growth target from 17% to 20% before currency effects, and expects 1998 profit repatriation of roughly 20 billion yen ($155 million). Balance-sheet risks to note include Japanese solvency and tax changes (including a $13 million 1998 net earnings drag from new tax rules), the Nissan Mutual insolvency assessment, and a year-end shareholders' equity of $3.43 billion that is inflated by $1.28 billion of net unrealized gains on securities. Notes payable rose to $523 million as the company borrowed to fund share repurchases of $314 million in 1997. For investors, the central question is whether AFLAC's underlying Japanese franchise can keep growing in yen terms through a prolonged Japanese downturn and deregulation. The filing supports a positive view of capital strength (AFLAC U.S. statutory capital of $1.8 billion, A+ AM Best rating) and of management's disciplined, high-quality investment approach, which holds no junk bonds or derivatives for trading. However, it also shows that reported headline growth in 1997 was flattered by non-recurring gains and currency translation, so investors should focus on the operating earnings trend and the yen exchange rate.
Mar 26, 1998
1996
AFLAC INC Annual Report, Year Ended Dec 31, 1996
AFLAC Incorporated's 1996 10-K shows a company whose earnings are driven overwhelmingly by its Japanese supplemental health (primarily cancer expense) insurance franchise, which generated 82% of 1996 total revenues. Consolidated net earnings rose 13.0% to $394.4 million, or $2.73 per share, but that figure includes a one-time after-tax gain of $48.2 million ($.33 per share) from selling WAFB-TV, plus a $60.3 million pretax gain. Excluding realized investment gains and the television station gain, operating earnings were $347.4 million, or $2.40 per share, up only 3.0% on a per-share basis and essentially flat in dollars (down 0.4%). Management attributes the weak operating results to the weaker yen, which averaged 108.84 per dollar in 1996 versus 94.10 in 1995 and reduced operating EPS by roughly $.29. On a constant-currency basis, operating EPS grew 15.5%. Growth and capital deployment remain central to the story. Consolidated premium income declined 2.6% to $5.9 billion as yen weakness offset strong U.S. growth (AFLAC U.S. premiums rose 10.0% in dollars and pretax operating earnings rose 23.0%). Management raised its 1997-2000 target to 15%-17% annual operating EPS growth excluding currency effects, and guides to roughly 17% constant-currency growth for 1997, which would translate to about 10% growth including a yen assumed at 120. The company repurchased 5.9 million shares in 1996 and has authorization for up to 8.0 million additional shares, having bought 20.4 million since 1994. Shareholders' equity was essentially flat at $2.13 billion, held down by a $202.6 million decline in unrealized securities gains. Key risks for investors include concentration in Japan (yen exchange-rate exposure, Japanese regulatory and tax changes, including a proposed tax on foreign insurers' investment income that could reduce 1996 net earnings by about $23.7 million), low Japanese investment yields, and a pending sale of the remaining six broadcast stations expected in the first half of 1997, with a total estimated pretax gain of $325 million. The disclosed Japanese deregulation agreement could also increase competition, though it prohibits new domestic competitors from selling cancer or medical insurance until January 1, 2001.
Mar 26, 1997
1995
AFLAC INC Annual Report, Year Ended Dec 31, 1995
AFLAC Incorporated's 1995 10-K shows a company whose results are overwhelmingly driven by its Japanese supplemental health (cancer expense) franchise. Consolidated total revenues rose 17.7% to $7.19 billion and net earnings grew 19.2% to $349.1 million, or $2.33 per share (adjusted for the three-for-two split payable March 18, 1996). AFLAC Japan generated 85% of total revenues and 90% of total assets, and the company describes itself as the world's leading writer of cancer expense insurance. Shareholders' equity reached $2.13 billion, up 22% for the year, and book value per share rose to $15.03. Investment assets grew 25.3% to $20.0 billion, and net investment income climbed to $1.02 billion. Investors should weigh several items. Reported dollar results are heavily affected by the yen: the yen weakened in late 1995, the company's objective is to grow operating EPS 15% before currency effects, and management's 1996 guidance assumes a 105 yen/dollar average versus 94.10 in 1995. The Japanese government bond yield fell during 1995, which pushed up unrealized gains on fixed-maturity securities (the fair value of those securities exceeded amortized cost by $2.6 billion) and the company is exposed to a duration mismatch, with policy liabilities averaging about 13 years against roughly 9 years on the related assets. The company is also contesting IRS proposed adjustments for 1989-1991 that could significantly affect future results, and it has an active share repurchase program (14.5 million shares bought under authorizations totaling 21.4 million). Overall, the filing portrays a financially strong, highly profitable insurer with rapid growth and a large share buyback. The main risks are concentration in Japan, currency translation, Japanese regulatory and deregulation developments, and the tax dispute.
Mar 26, 1996
1993
AFLAC INC Annual Report, Year Ended Dec 31, 1993
AFLAC Incorporated's 1993 10-K describes a holding company whose economic engine is AFLAC Japan, which accounted for 82% of 1993 total revenues. The company is principally a supplemental health insurer, with 99.6% of 1993 consolidated premium income from health insurance, and it is widely described in the filing as the world's leading writer of cancer expense insurance. Consolidated earned premiums rose to $4.23 billion in 1993 from $3.37 billion in 1992, driven by 15.5 million health policies in force at year-end, and net investment income reached $689.3 million, up $156.1 million year over year. Total investments and cash were $12.5 billion, up $3.0 billion. Net earnings were $255.3 million, including an $11.4 million cumulative effect of accounting changes, compared with $183.4 million in 1992, and shareholders' equity rose to $1.37 billion from $1.08 billion. For investors, the key considerations are concentration and rate-sensitivity. Japan dominates the business, Japanese cancer policies are sold through a distinctive corporate agency system, and the company relies on profit remittances from Japan, which totaled $97.9 million in 1993 versus $33.4 million in 1992. Those remittances depend on Japanese regulatory earnings that can swing with interest rates and yen/dollar exchange rates. Japanese regulators are also moving toward risk-based capital rules and premium increases on new policies (Super Cancer premiums rise about 16% starting July 1994), and deregulation is in a preliminary stage. Management views deregulation as having no immediate material effect. The company also owns seven TV stations (about $68.5 million in revenue) and an Atlanta-area headquarters, and it faces only routine litigation after the resolved derivative suit. The filing is a largely incorporating document: Items 5 through 8, including the audited financial statements and MD&A, are incorporated by reference from Exhibit 13, and the filing does not include them in the text provided. Investors should therefore treat the figures above as drawn from the business section, schedules, and condensed parent-company statements, and consult the Exhibit 13 annual report for full consolidated detail and management commentary.
Mar 30, 1994