01—Abstract
Summary
Summary of the 10-K filed February 27, 2014. Cited figures are marked; the original filing is the authoritative source.
Aflac Incorporated's 2013 10-K report highlights a company heavily reliant on its Japanese operations, which contributed 74%a of total revenues and 85% of total assets.
The company's net earnings for 2013 were $3.2 billionb, 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 millionc and consistent dividend payments.
02—Key points
Key Highlights
- Japan operations are the primary driver of Aflac's revenue and assets, accounting for 74% and 85% respectively.
- Net earnings increased to $3.2 billion in 2013, with diluted EPS of $6.76.
- The weaker yen negatively impacted reported revenues, but the company's core insurance businesses demonstrated resilience.
- Aflac Japan's sales declined primarily due to a shift in customer focus from insurance products to investment trusts at banks.
- Aflac U.S. saw a slight decrease in new annualized premium sales, impacted by economic conditions and healthcare reform uncertainty.
- The company repurchased $800 million of its common stock in 2013 and continued its dividend payments.
- Investment portfolio remains heavily focused on fixed-income securities, with a significant portion in Japanese government bonds.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2013filed February 27, 2014Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $23.94B$25.36B | −5.6% |
| SG&A Expenses | $2.22B$2.42B | −8.0% |
| Operating Income | $4.40B$4.66B | −5.6% |
| Interest Expense | $293.00M$261.00M | +12.3% |
| Net Income | $3.16B$2.87B | +10.2% |
| EPS (Basic) | $3.40$3.07 | +10.7% |
| EPS (Diluted) | $3.38$3.06 | +10.6% |
| Shares Outstanding (Basic) | 929.00M933.74M | −0.5% |
| Shares Outstanding (Diluted) | 934.82M938.57M | −0.4% |
05—Questions
Frequently Asked Questions
What is the geographic concentration of Aflac's business?
Aflac's business is heavily concentrated in Japan, with its operations there accounting for 74% of total revenues and 85% of total assets in 2013. The United States represents the secondary market.
How did the foreign exchange rate impact Aflac's financial results?
The weakening of the Japanese yen against the U.S. dollar negatively impacted Aflac's reported revenues and net investment income in dollar terms. However, the company's management evaluates financial performance excluding these foreign currency translation effects to understand underlying profitability.
What is Aflac's strategy regarding its investment portfolio?
Aflac's investment strategy is to invest primarily in fixed-income securities to provide a reliable stream of investment income and to manage asset-liability matching. The company also engages in hedging activities to mitigate currency and interest rate risks.
What is the company's approach to shareholder returns?
Aflac returned capital to shareholders through a combination of share repurchases and dividends. In 2013, the company repurchased approximately $800 million of its common stock and paid dividends, demonstrating a commitment to shareholder value.
How is the Affordable Care Act (ACA) expected to impact Aflac?
Aflac believes the ACA, as enacted, does not materially affect the design of its insurance products, which are supplemental. However, indirect consequences such as increased out-of-pocket costs for consumers could create opportunities for Aflac's products.
06—Continue