01—Abstract
Summary
Summary of the 10-K filed February 24, 2023. Cited figures are marked; the original filing is the authoritative source.
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 billiona 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 billionb, 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.
02—Key points
Key Highlights
- Aflac reported net earnings of $4.2 billion for 2022, a slight decrease from $4.3 billion in 2021, with diluted earnings per share of $6.59 compared to $6.39 in 2021.
- Total revenues decreased by 11.8% to $19.5 billion in 2022, primarily due to economic headwinds and a weaker yen.
- Shareholder equity decreased to $22.4 billion from $33.3 billion, impacted by a net unrealized loss on investment securities and derivatives totaling $729 million.
- The company repurchased $2.4 billion of its common stock in 2022 and maintained a strong capital position, with Aflac Japan's Solvency Margin Ratio at 878% and a combined RBC for Aflac U.S. of 732%.
- Aflac Japan remains the primary revenue generator, contributing 69% of total revenues, but experienced a 19.4% decrease in net earned premiums in dollar terms due to currency translation and a shift in product mix.
- Aflac U.S. reported a 16.1% increase in new annualized premium sales, driven by investments in growth initiatives and improved productivity.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 24, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $19.14B$21.55B | −11.2% |
| SG&A Expenses | $3.25B$3.54B | −8.2% |
| Operating Expenses | $5.38B$5.87B | −8.3% |
| Operating Income | $4.16B$4.93B | −15.7% |
| Interest Expense | $217.00M$238.00M | −8.8% |
| Net Income | $4.42B$4.23B | +4.4% |
| EPS (Basic) | $6.96$6.28 | +10.8% |
| EPS (Diluted) | $6.93$6.25 | +10.9% |
| Shares Outstanding (Basic) | 634.82M673.62M | −5.8% |
| Shares Outstanding (Diluted) | 637.65M676.73M | −5.8% |
05—Questions
Frequently Asked Questions
What were Aflac's key financial performance indicators for 2022?
For the full year 2022, Aflac reported net earnings of $4.2 billion ($6.59 per diluted share) on total revenues of $19.5 billion. Adjusted earnings were $3.4 billion ($5.33 per diluted share). Shareholders' equity stood at $22.4 billion, reflecting a net unrealized loss on investments and derivatives.
How did the weakening Japanese yen impact Aflac's results?
The weakening yen significantly impacted Aflac's reported results. The average yen/dollar exchange rate in 2022 was 130.17, 15.7% weaker than in 2021. This weakening suppressed the company's current period results in relation to the comparable prior period, negatively impacting adjusted earnings per diluted share by $0.34.
What is the company's outlook for 2023?
Aflac anticipates maintaining strong pre-tax margins with increased sales in Aflac Japan through product refreshment, and realizing benefits from platform investments in Aflac U.S. The company plans to continue strong capital ratios in both segments, support shareholder dividends, and tactically deploy capital through share repurchases and opportunistic investments. They expect low single-digit declines in Aflac Japan net earned premiums and 3-5% compound annual growth in Aflac U.S. net earned premiums.
How does Aflac manage its investment portfolio and associated risks?
Aflac manages its investment portfolio with a disciplined asset and liability management strategy, aiming for long-term risk-adjusted returns while maintaining regulatory and capital objectives. The strategy involves a diversified portfolio of yen-denominated assets, U.S. dollar-denominated assets hedged to yen, and unhedged U.S. dollar-denominated assets. The company actively monitors risks related to currency fluctuations, interest rates, credit quality, and equity market volatility, employing various hedging strategies and risk management policies.
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