10-QPeriod: Q1 FY2016

AFLAC INC Quarterly Report for Q1 Ended Mar 31, 2016

Filed May 4, 2016For Securities:AFL

Summary

Aflac Incorporated reported strong financial results for the first quarter of 2016, with net earnings of $731 million, or $1.74 per diluted share, an increase from $663 million, or $1.51 per diluted share, in the prior year's first quarter. This growth was supported by a 3.0% increase in total operating revenues to $5.45 billion, driven by higher net premiums and net investment income, particularly benefiting from a stronger Japanese Yen relative to the U.S. Dollar. The company's core insurance operations in both Japan and the U.S. demonstrated resilience, with Aflac Japan continuing to be the primary earnings contributor. Aflac also continued its commitment to returning capital to shareholders, repurchasing $600 million of its common stock during the quarter while maintaining robust capital levels.

Financial Highlights

32 data points
Beta

Revenue

$5.45B

Net Income

$731.00M

13.4% Net Margin

EPS (Diluted)

$0.87

Total Assets

$127.77B

Cash & Equivalents

$3.45B

Free Cash Flow

$1.33B

Financial Statements
Beta
Revenue$5.45B
SG&A Expenses$563.00M
Operating Income$1.08B
Interest Expense$65.00M
Net Income$731.00M
EPS (Basic)$0.88
EPS (Diluted)$0.87
Shares Outstanding (Basic)837.50M
Shares Outstanding (Diluted)841.84M

Key Highlights

  • 1Net earnings increased to $731 million ($1.74 per diluted share) from $663 million ($1.51 per diluted share) in Q1 2015.
  • 2Total revenues rose by 4.4% to $5.45 billion, driven by Aflac Japan's performance and a stronger Yen.
  • 3Aflac Japan's pretax operating earnings increased to $838 million from $819 million, showing stable performance.
  • 4Aflac U.S. saw a significant 16.6% increase in pretax operating earnings to $332 million.
  • 5The company repurchased $600 million of its common stock in the first quarter of 2016.
  • 6Shareholders' equity included a net unrealized gain on investment securities and derivatives of $4.7 billion at March 31, 2016.
  • 7The company's capital position remained strong, with Aflac Japan's Solvency Margin Ratio (SMR) high.

Frequently Asked Questions

Aflac reported net earnings of $731 million for the first quarter of 2016, a 10.3% increase compared to $663 million in the same period of 2015.

A stronger Japanese Yen against the U.S. Dollar positively impacted Aflac's reported U.S. dollar denominated results. For Aflac Japan, revenues increased by 3.0% to $3.81 billion, and pretax operating earnings rose 2.4% to $838 million, partly due to the favorable currency translation.

Aflac demonstrated its commitment to returning capital to shareholders by repurchasing $600 million of its common stock in the first three months of 2016. The company also plans to repurchase an additional $1.4 billion of its common stock in 2016.

The company's investment portfolio generated net investment income of $801 million, an increase from $782 million in the prior year. Realized investment gains were $73 million, driven by sales and redemptions of securities, partially offset by other-than-temporary impairment losses.

Aflac Japan's pretax operating earnings showed stable growth, with a focus on less interest-rate sensitive third sector products. Aflac U.S. experienced a strong increase in pretax operating earnings, driven by favorable claims experience and expense management. The company anticipates stable to favorable performance in both segments for the remainder of the year.