10-QPeriod: Q3 FY2016

AFLAC INC Quarterly Report for Q3 Ended Sep 30, 2016

Filed November 4, 2016For Securities:AFL

Summary

Aflac Incorporated reported solid financial results for the nine months ended September 30, 2016, with revenues reaching $16.6 billion and net earnings of $1.9 billion. The company's U.S. dollar-denominated net earnings per diluted share saw a significant increase to $4.59, up from $4.14 in the prior year period, reflecting the strengthening yen's positive impact on reported results. This favorable currency translation, coupled with robust performance in both the U.S. and Japan segments, contributed to the overall growth. Key financial drivers included strong net premium income and net investment income, particularly from Aflac Japan, which accounts for a substantial portion of the company's total revenues and assets. Despite realized investment losses, primarily due to derivative valuations, the company demonstrated effective management of its investment portfolio and operational expenses, leading to an increase in pretax operating earnings across both segments. Shareholder returns were supported by share repurchases totaling $1.2 billion and a declared cash dividend increase.

Financial Highlights

33 data points
Beta

Revenue

$5.72B

Net Income

$629.00M

11.0% Net Margin

EPS (Diluted)

$0.77

Total Assets

$144.10B

Cash & Equivalents

$5.27B

Free Cash Flow

$1.27B

Financial Statements
Beta
Revenue$5.72B
SG&A Expenses$675.00M
Operating Income$1.09B
Interest Expense$65.00M
Net Income$629.00M
EPS (Basic)$0.77
EPS (Diluted)$0.77
Shares Outstanding (Basic)817.04M
Shares Outstanding (Diluted)822.28M

Key Highlights

  • 1Net earnings for the nine months ended September 30, 2016, increased to $1.9 billion from $1.8 billion in the same period of 2015.
  • 2Diluted earnings per share rose to $4.59 for the nine months ended September 30, 2016, from $4.14 in the prior year.
  • 3Aflac Japan continues to be the primary contributor to earnings, with pretax operating earnings of $2.56 billion for the nine-month period.
  • 4Total revenues for the nine months ended September 30, 2016, increased to $16.6 billion from $15.6 billion in the prior year.
  • 5The company repurchased $1.2 billion of its common stock in the open market during the first nine months of 2016.
  • 6Shareholders' equity saw a significant increase in unrealized gains on investment securities, reaching $6.1 billion at September 30, 2016, compared to $3.0 billion at December 31, 2015.
  • 7The company declared a fourth quarter cash dividend of $0.43 per share, representing a 4.9% increase over the same period in 2015.

Frequently Asked Questions

Aflac reported increased net earnings of $1.9 billion and diluted earnings per share of $4.59 for the first nine months of 2016, up from $1.8 billion and $4.14, respectively, in the same period of 2015. Total revenues also grew to $16.6 billion.

The strengthening yen positively impacted Aflac's reported U.S. dollar-denominated earnings due to the significant portion of its business operations in Japan. This currency translation effect helped boost revenues and net earnings when reported in U.S. dollars.

Aflac Japan is the principal contributor to the company's consolidated earnings. For the nine months ended September 30, 2016, Aflac Japan reported pretax operating earnings of $2.56 billion, representing a substantial portion of the company's total pretax operating earnings.

Aflac actively manages its investment portfolio, with a focus on fixed-maturity securities for stable income. The company also returned $1.2 billion to shareholders through share repurchases in the first nine months of 2016 and increased its quarterly cash dividend by 4.9%.