AFLAC INC Quarterly Report for Q1 Ended Mar 31, 2010

Summary

Aflac Incorporated (AFL) reported strong first-quarter 2010 results, with net earnings increasing by 11.8% year-over-year to $636 million, or $1.35 per diluted share. Total revenues grew by 5.1% to $5.1 billion, driven by growth in both Aflac Japan and Aflac U.S. segments. The company's performance benefited from a stronger Japanese Yen, which positively impacted reported U.S. dollar results. While the company experienced net realized investment losses of $46 million, this was primarily due to other-than-temporary impairments totaling $42 million. The company's investment portfolio saw a significant reduction in gross unrealized losses on available-for-sale debt and perpetual securities, primarily due to improved fair values. Management remains confident in the company's financial condition and its ability to meet policyholder obligations.

Key Highlights

• 1Net earnings increased 11.8% to $636 million ($1.35 per diluted share) for Q1 2010, compared to $569 million ($1.22 per diluted share) in Q1 2009.
• 2Total revenues rose 5.1% to $5.1 billion, with Aflac Japan contributing significantly to overall growth.
• 3Aflac Japan's pretax operating earnings increased by 20.5% in USD, driven by premium income growth and improved benefit ratios.
• 4Aflac U.S. saw a 19.4% increase in pretax operating earnings, though total new annualized premium sales decreased by 10.0% due to challenging economic conditions.
• 5The company experienced net realized investment losses of $46 million, including $42 million in other-than-temporary impairments, a decrease from $234 million in impairments in the prior year.
• 6Gross unrealized losses on available-for-sale debt and perpetual securities decreased significantly by $2.3 billion, indicating improving market conditions.
• 7The company's capital position remains strong, with a debt-to-capital ratio of 21.9% and a high risk-based capital ratio for its insurance subsidiaries.

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