01—Abstract
Summary
Summary of the 10-K filed February 25, 2016. Cited figures are marked; the original filing is the authoritative source.
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 billiona, primarily driven by the weakening Yen.
Net earnings for the year were $2.5 billion, translating to $5.85b 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.
02—Key points
Key Highlights
- Total revenues decreased by 8.2% to $20.9 billion, largely due to a weaker Yen.
- Net earnings were $2.5 billion, or $5.85 per diluted share.
- Aflac Japan remains the dominant segment, contributing 70% of total revenues and 83% of total assets.
- The company repurchased $1.3 billion of its common stock in 2015, demonstrating a commitment to returning capital to shareholders.
- New annualized premium sales in Aflac U.S. increased by 3.7% to $1.49 billion, driven by growth in accident and short-term disability products.
- Aflac Japan saw a 13.4% increase in sales of its third-sector cancer and medical products, indicating a strategic focus on less interest-rate-sensitive business.
- The company maintained a strong capital position, with Aflac's company action level RBC ratio at 933% as of December 31, 2015.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2015filed February 25, 2016Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $20.87B$22.73B | −8.2% |
| SG&A Expenses | $2.61B$2.26B | +15.3% |
| Operating Income | $4.00B$4.25B | −5.9% |
| Interest Expense | $289.00M$317.00M | −8.8% |
| Net Income | $2.53B$2.95B | −14.2% |
| EPS (Basic) | $2.94$3.27 | −10.1% |
| EPS (Diluted) | $2.92$3.25 | −10.0% |
| Shares Outstanding (Basic) | 861.31M902.41M | −4.6% |
| Shares Outstanding (Diluted) | 866.34M908.00M | −4.6% |
05—Questions
Frequently Asked Questions
What was Aflac's financial performance in 2015?
In 2015, Aflac reported total revenues of $20.9 billion, a decrease of 8.2% from the prior year, primarily due to the weakening Japanese Yen. Net earnings were $2.5 billion, or $5.85 per diluted share. The company maintained strong operational performance despite challenging market conditions.
How did the Japanese market perform relative to the U.S. market?
Aflac Japan continued to be the dominant segment, accounting for 70% of total revenues and 83% of total assets. Sales of critical third-sector products (cancer and medical) in Japan saw a significant increase, reflecting a strategic shift towards less interest-rate-sensitive business. In the U.S., new annualized premium sales grew modestly, with strong performance in accident and short-term disability products.
What is Aflac's capital position and how is it managing shareholder returns?
Aflac maintained a strong capital position, evidenced by a high Risk-Based Capital (RBC) ratio. The company actively managed its capital by repurchasing $1.3 billion of its common stock in 2015 and consistently paying dividends, reflecting a commitment to returning value to shareholders.
What were the main risks and challenges faced by Aflac in 2015?
Key risks and challenges included difficult global capital markets, a low-interest-rate environment impacting investment income, foreign currency fluctuations (particularly the Yen), and regulatory changes. The company also highlighted concentration risk due to its significant operations in Japan.
06—Continue