10-KPeriod: FY2021

AFLAC INC Annual Report, Year Ended Dec 31, 2021

Filed February 23, 2022For Securities:AFL

Summary

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.

Financial Highlights

37 data points
Beta

Revenue

$21.55B

Net Income

$4.23B

19.6% Net Margin

EPS (Diluted)

$6.25

Total Assets

$157.54B

Cash & Equivalents

$5.05B

Free Cash Flow

$5.05B

Financial Statements
Beta
Revenue$21.55B
SG&A Expenses$3.54B
Operating Expenses$5.87B
Operating Income$4.93B
Interest Expense$238.00M
Net Income$4.23B
EPS (Basic)$6.28
EPS (Diluted)$6.25
Shares Outstanding (Basic)673.62M
Shares Outstanding (Diluted)676.73M

Key Highlights

  • 1Aflac Japan continues to be the largest contributor to earnings, with pretax adjusted earnings increasing by 15.0% in 2021.
  • 2Aflac U.S. saw a 16.6% increase in pretax adjusted earnings, benefiting from improved claims experience and a stronger sales environment.
  • 3Total revenues remained stable at $22.1 billion, while net earnings were $4.3 billion ($6.39 per diluted share).
  • 4The company returned $3.2 billion to shareholders in 2021 through share repurchases ($2.3 billion) and dividends ($1.3 billion).
  • 5Aflac Japan's Solvency Margin Ratio (SMR) remained strong at 1,012% as of December 31, 2021, indicating a robust capital position.
  • 6The company is making strategic investments in digital capabilities to improve productivity, efficiency, and customer service in both its Japanese and U.S. operations.
  • 7Risk factors highlight significant exposure to global capital markets, interest rate risk, and the concentration of business in Japan.

Frequently Asked Questions

In 2021, Aflac reported total revenues of $22.1 billion, a slight decrease of 0.2% compared to 2020. Net earnings were $4.3 billion, or $6.39 per diluted share, down from $4.8 billion in 2020. Adjusted earnings (a non-GAAP measure) were $4.0 billion, or $5.94 per diluted share, up from $3.6 billion in 2020.

The company stated that the impact of the COVID-19 pandemic continued to evolve. While both segments took measures for employee health and safety and accelerated digital investments, the pandemic's impact on economic conditions led to sales headwinds. However, pandemic-related claims and reserve increases were more than offset by a reduction in non-COVID-19 medical claims. The company reported no material realized losses or impairments associated with the pandemic.

Aflac remains committed to returning capital to shareholders. In 2021, the company repurchased $2.3 billion of its common stock and paid $1.3 billion in dividends. The board of directors announced a 21.2% increase in the quarterly cash dividend for the first quarter of 2022, indicating continued confidence in its financial strength and future cash flows.

The company's risk factors highlight significant dependencies on global capital markets and the Japanese economy due to its concentration of business in Japan. Other key risks include exposure to interest rate fluctuations, credit risk in its investment portfolio, operational risks related to IT systems and data security, and regulatory changes in both the U.S. and Japan. The company also notes the ongoing impact of COVID-19 and its variants.