10-QPeriod: Q1 FY2009

AFLAC INC Quarterly Report for Q1 Ended Mar 31, 2009

Filed May 8, 2009For Securities:AFL

Summary

Aflac Inc. reported solid financial results for the first quarter of 2009, with net earnings per diluted share increasing to $1.22, up from $0.99 in the prior year period. Total revenues also saw a significant increase, driven primarily by strong performance in Aflac Japan. Despite a challenging global economic environment, the company demonstrated resilience, with premium income and investment income showing positive growth. The company's balance sheet reflects a strong asset base, although investments in securities available for sale experienced a substantial increase in unrealized losses due to widening credit spreads. Management continues to assess these unrealized losses, noting that most are considered temporary. The company also maintained a strong capital position and adequate liquidity, supported by consistent cash flows from operations.

Financial Highlights

21 data points
Beta

Revenue

$4.82B

Net Income

$569.00M

11.8% Net Margin

EPS (Diluted)

$0.61

Cash & Equivalents

$1.20B

Free Cash Flow

$1.65B

Financial Statements
Beta
Revenue$4.82B
SG&A Expenses$457.00M
Interest Expense$8.00M
Net Income$569.00M
EPS (Basic)$0.61
EPS (Diluted)$0.61
Shares Outstanding (Basic)932.19M
Shares Outstanding (Diluted)934.26M

Key Highlights

  • 1Net earnings per diluted share rose to $1.22 in Q1 2009 from $0.99 in Q1 2008.
  • 2Total revenues increased to $4.818 billion from $4.267 billion in the prior year quarter.
  • 3Aflac Japan's premium income grew by 16.5% (in dollars) to $3.012 billion, driving overall revenue growth.
  • 4The company experienced a significant increase in unrealized losses on securities available for sale, from $1.211 billion at the end of 2008 to $2.986 billion at the end of Q1 2009, primarily due to widening credit spreads.
  • 5Aflac Japan's pretax operating earnings increased by 22.9% (in dollars) compared to the prior year period.
  • 6The company's debt-to-total capitalization ratio improved to 16.1% from 18.0% at the end of 2008.
  • 7Total assets decreased to $71.815 billion from $79.331 billion at the end of 2008, largely due to foreign currency translation effects and a reduction in investment securities.

Frequently Asked Questions

Aflac reported strong earnings growth, with net earnings per diluted share reaching $1.22 for the first quarter of 2009, a notable increase from $0.99 in the same period of 2008. This growth was primarily driven by solid operational performance in both its U.S. and Japanese segments.

Aflac Japan showed significant strength, with premium income increasing by 16.5% in dollar terms to $3.012 billion. Pretax operating earnings for Aflac Japan also rose by 22.9% (in dollars) compared to the prior year's first quarter, indicating robust underlying profitability in its core insurance operations despite the challenging economic climate.

The company's investment portfolio, particularly securities available for sale, experienced a substantial increase in unrealized losses, growing from $1.211 billion at the end of 2008 to $2.986 billion at the end of Q1 2009. Management attributes this primarily to widening credit spreads in the global financial markets, but states that most of these declines are considered temporary and do not currently warrant impairment charges.

Yes, Aflac managed its capital effectively. The company's debt-to-total capitalization ratio improved to 16.1% from 18.0% at the end of 2008. Additionally, the company repaid its $450 million senior notes upon maturity in April 2009 and continued to manage its share repurchase programs.