Summary
Aflac Inc. (AFL) issued an 8-K filing on December 27, 2019, addressing regulatory actions taken by Japan's Financial Services Agency and the Ministry of Internal Affairs and Communications against Japan Post Company, Ltd. (JPC) and Japan Post Insurance Co., Ltd. (JPI). These actions involve a three-month suspension of sales for JPI insurance products. Importantly, Aflac Japan's cancer insurance products are explicitly excluded from these suspension orders, and the company expects to continue selling them through the Japan Post channel. Despite the potential for 2020 cancer insurance sales through Japan Post to be more impacted than initially forecast (potentially declining more than the previously disclosed 20%-30% range), Aflac Incorporated reaffirmed its guidance for 2020 earned premium, adjusted earnings per share, and capital deployment. The company also noted the resignation of key Japan Post Group executives, but anticipates no material impact on its strategic and capital alliance with Japan Post, looking forward to working with new leadership.
Key Highlights
- 1Japan Post entities (JPC and JPI) face a three-month business suspension on selling JPI insurance products due to regulatory action.
- 2Aflac Japan's cancer insurance products are NOT included in the suspension orders and sales are expected to continue through Japan Post.
- 3Aflac expects cancer sales through Japan Post to recover in the second half of 2020.
- 4The potential decline in 2020 cancer insurance sales via Japan Post might exceed the previously disclosed 20%-30% range.
- 5Aflac Incorporated reaffirmed its 2020 guidance for earned premium, adjusted EPS, and capital deployment.
- 6Key executives at Japan Post Group are resigning, but Aflac does not anticipate a material impact on its strategic and capital alliance.