Aflac Incorporated Announces Fourth Quarter Results, Increases Quarterly Cash Dividend
January 31 2005 - 4:28PM
PR Newswire (US)
Aflac Incorporated Announces Fourth Quarter Results, Increases
Quarterly Cash Dividend COLUMBUS, Ga., Jan. 31
/PRNewswire-FirstCall/ -- Aflac Incorporated (NYSE:AFL) today
reported its fourth quarter results. Total revenues, which
reflected a stronger average yen/dollar exchange rate, were $3.4
billion in the fourth quarter of 2004, or 21.1% higher than a year
ago. Net earnings were $418 million, or $.81 per diluted share,
compared with $73 million, or $.14 per diluted share, a year ago.
Net earnings in the fourth quarter of 2004 included realized
investment losses of $3 million, or $.01 per diluted share,
compared with realized investment losses of $175 million, or $.34
per diluted share, in the fourth quarter of 2003. Net earnings in
the fourth quarter also included a loss of $7 million, or $.02 per
diluted share, as a result of the change in fair value of the
interest rate component of the cross-currency swaps related to the
company's senior notes as required by SFAS 133. In the fourth
quarter of 2003, the impact from SFAS 133 reduced net earnings by
$14 million, or $.02 per diluted share. Fourth quarter net earnings
in 2004 also benefited by $128 million, or $.25 per diluted share,
from a release of the valuation allowance for deferred tax assets
resulting from passage of the American Jobs Creation Act of 2004.
We believe that an analysis of operating earnings, a non-GAAP
financial measure, is vitally important to an understanding of
Aflac's underlying profitability drivers. We define operating
earnings as the profits we derive from our operations before
realized investment gains and losses, the impact from SFAS 133, and
nonrecurring items. Management uses operating earnings to evaluate
the financial performance of Aflac's insurance operations because
realized gains and losses, the impact from SFAS 133, and
nonrecurring items tend to be driven by general economic conditions
and events, and therefore obscure the underlying fundamentals and
trends in Aflac's insurance operations. Operating earnings in the
fourth quarter of 2004 were $300 million, compared with $262
million a year ago. Operating earnings per diluted share rose 18.0%
to $.59, compared with $.50 per diluted share in the fourth quarter
of 2003. For the year, total revenues rose 16.0% to $13.3 billion
in 2004. Net earnings were $1.3 billion, or $2.52 per diluted
share, compared with $795 million, or $1.52 per diluted share, a
year ago. Operating earnings were $1.2 billion, or $2.30 per
diluted share, compared with $989 million, or $1.89 per diluted
share, in 2003. Excluding the benefit of $.08 per share from the
stronger yen, operating earnings per diluted share increased 17.5%
for the year. The board of directors increased the quarterly cash
dividend 15.8% from $.095 to $.11 per share, effective with the
first quarter of 2005. The first quarter dividend is payable on
March 1, 2005, to shareholders of record at the close of business
on February 18, 2005. This marks the 22nd consecutive year in which
the cash dividend has been increased. Commenting on the company's
results, Chairman and Chief Executive Officer Daniel P. Amos
stated: "We were pleased that Aflac Japan's total new annualized
premium sales were better than our expectations for the quarter. In
the fourth quarter, new sales increased 5.3% from a year ago to a
record 33.4 billion yen, or $316 million. New sales in the quarter
benefited from solid sales growth of the medical and ordinary life
categories. Total new annualized premium sales were up 1.1% to
122.5 billion yen, or $1.1 billion for the full year. New sales
growth in 2004 was held down by declines in Rider MAX sales and
conversions in addition to lower sales through Dai-ichi Mutual
Life. Excluding sales through Dai-ichi, sales from our traditional
channels were up 9.3% in the fourth quarter and 4.0% for the year.
"We introduced two new versions of EVER in January 2005 in order to
better segment the market and extend the growth of medical sales.
We believe the added benefits of the new products will appeal to a
broader group of consumers. We also believe that the continued
expansion of our product line and sales force, combined with
Aflac's leading market position, will enable us to produce a 5% to
10% increase in total new annualized premium sales in yen for 2005.
"Aflac U.S. produced total new annualized premium sales in the
fourth quarter of $343 million, a .5% decrease from the fourth
quarter of 2003. For the year, total new sales were up 5.1% to $1.2
billion. These results were below our expectations for both the
quarter and for the year. We continue to believe our slower sales
growth has resulted primarily from the significant changes we made
to our sales management team in 2003 and at the start of 2004.
While we believe the basics of our infrastructure are in place, we
will continue to focus on providing resources and support to
strengthen, train, and grow our sales force. "We are convinced that
the best approach to the vast U.S. market potential is to expand
our distribution system and our product line. In that regard, we
were encouraged that recruitment of new sales associates picked up
in the fourth quarter. New agent recruitment rose 5.9% in the
fourth quarter, which was the largest increase we have experienced
since the fourth quarter of 2002. We have also restructured our
training department and are intensifying our training efforts,
which we hope will lead to improved agent retention and
productivity. In the product area, we recently developed an
innovative vision product that will be rolled out to the market in
mid-2005. We believe it is unique to the marketplace, and we look
for vision care to be a solid addition to our already strong
product line. We are convinced we are taking the correct steps to
re-ignite new sales growth. However, we believe new sales in the
first quarter of 2005 will likely decline, due in part to difficult
comparisons to 2004. As a result, we believe it will be the second
quarter at the earliest before we see improved growth. As such, we
have established a target of a 3% to 8% increase in new sales for
2005. "Our view of the U.S. and Japanese markets has not changed,
and we remain encouraged about the outlook for our business. We
believe rising out-of- pocket expenses for consumers will drive a
growing need for the products we sell. Furthermore, we believe our
business model is sound, and that our many competitive strengths
are intact. "We are very pleased that our financial results kept
pace with our expectations throughout 2004. And we are proud that
we exceeded our primary financial objective of increasing operating
earnings per diluted share 17% in 2004, excluding the impact of the
yen. Our ability to achieve financial targets when new sales are
soft reflects the underlying strength of our operations. Due to
that strength, our goals for 2005 and 2006 remain unchanged. Our
objective is to increase operating earnings per diluted share by
15% in 2005 and 2006 before currency translation." Aflac is the
number one provider of guaranteed-renewable insurance in the United
States and Japan. Aflac's innovative products provide protection to
more than 40 million people and go beyond traditional insurance by
directly paying claimants with cash benefits. Aflac's products are
primarily sold at worksites in the United States. In Japan, Aflac
is the largest life insurer in terms of individual insurance
policies in force. In January 2005, Aflac was included in Fortune
magazine's list of "The 100 Best Companies to Work For in America"
for the seventh consecutive year. Aflac has also been included in
Forbes magazine's "Platinum 400 List of Best Big Companies in
America" for five consecutive years and in Fortune magazine's
listing of "America's Most Admired Companies" for four consecutive
years. Aflac Incorporated is a Fortune 500 company listed on the
New York Stock Exchange under the symbol AFL. To find out more
about Aflac, visit aflac.com. Aflac Incorporated will webcast its
fourth quarter analyst presentation on the Investor Relations page
of aflac.com at 7:10 p.m. (EST), Wednesday, February 2. AFLAC
INCORPORATED AND SUBSIDIARIES CONSOLIDATED SUMMARY OF EARNINGS
(UNAUDITED -- IN MILLIONS, EXCEPT FOR SHARE AND PER-SHARE AMOUNTS)
THREE MONTHS ENDED DECEMBER 31, 2004 2003 % Change Total revenues
$3,448 $2,847 21.1% Operating earnings 300 262 14.8 Reconciling
items, net of tax: Realized investment gains (losses) (3) (175)
Impact from SFAS 133 (7) (14) Release of deferred tax asset
valuation allowance 128 - Net earnings 418 73 475.1 Operating
earnings per share - diluted .59 .50 18.0 Reconciling items, net of
tax: Realized investment gains (losses) (.01) (.34) Impact from
SFAS 133 (.02) (.02) Release of deferred tax asset valuation
allowance .25 - Net earnings per share - diluted .81 .14 478.6 Net
earnings per share - basic .83 .14 492.9 Cash dividends paid per
share .095 .08 18.8 Shares used to compute earnings per share
(000): Basic 504,495 511,239 (1.3) Diluted 512,934 520,192 (1.4)
TWELVE MONTHS ENDED DECEMBER 31, Total revenues $13,281 $11,447
16.0% Operating earnings 1,186 989 19.9 Reconciling items, net of
tax: Realized investment gains (losses) (5) (191) Impact from SFAS
133 (13) (3) Release of deferred tax asset valuation allowance 128
- Japan pension obligation transfer 3 - Net earnings 1,299 795 63.3
Operating earnings per share - diluted 2.30 1.89 21.7 Reconciling
items, net of tax: Realized investment gains (losses) (.01) (.37)
Impact from SFAS 133 (.03) - Release of deferred tax asset
valuation allowance .25 - Japan pension obligation transfer .01 -
Net earnings per share - diluted 2.52 1.52 65.8 Net earnings per
share - basic 2.56 1.55 65.2 Cash dividends paid per share .38 .30
26.7 Shares used to compute earnings per share (000): Basic 507,333
513,220 (1.1) Diluted 516,421 522,138 (1.1) The Private Securities
Litigation Reform Act of 1995 provides a "safe harbor" to encourage
companies to provide prospective information, so long as those
informational statements are identified as forward-looking and are
accompanied by meaningful cautionary statements identifying
important factors that could cause actual results to differ
materially from those discussed. We desire to take advantage of
these provisions. This document contains cautionary statements
identifying important factors that could cause actual results to
differ materially from those projected herein, and in any other
statements made by company officials in oral discussions with the
financial community and contained in documents filed with the
Securities and Exchange Commission (SEC). Forward-looking
statements are not based on historical information and relate to
future operations, strategies, financial results or other
developments. Furthermore, forward-looking information is subject
to numerous assumptions, risks, and uncertainties. In particular,
statements containing words such as "expect," "anticipate,"
"believe," "goal," "objective," "may," "should," "estimate,"
"intends," "projects," or similar words as well as specific
projections of future results, generally qualify as
forward-looking. Aflac undertakes no obligation to update such
forward-looking statements. We caution readers that the following
factors, in addition to other factors mentioned from time to time
in our reports filed with the SEC, could cause actual results to
differ materially from those contemplated by the forward-looking
statements: legislative and regulatory developments; assessments
for insurance company insolvencies; competitive conditions in the
United States and Japan; new product development; ability to
attract and retain qualified sales associates; ability to
repatriate profits from Japan; changes in U.S. and/or Japanese tax
laws or accounting requirements; credit and other risks associated
with Aflac's investment activities; significant changes in
investment yield rates; fluctuations in foreign currency exchange
rates; deviations in actual experience from pricing and reserving
assumptions; level and outcome of litigation; downgrades in the
company's credit rating; changes in rating agency policies or
practices; subsidiary's ability to pay dividends to parent company;
and general economic conditions in the United States and Japan.
(Logo: http://www.newscom.com/cgi-bin/prnh/20041202/CLTH019LOGO )
Analyst and investor contact - Kenneth S. Janke Jr., 800.235.2667 -
option 3, FAX: 706.324.6330, or Media contact - Laura Kane,
706.596.3493, FAX: 706.320.2288, or
http://www.newscom.com/cgi-bin/prnh/20041202/CLTH019LOGO
http://photoarchive.ap.org/ DATASOURCE: Aflac Incorporated CONTACT:
Analysts and investors, Kenneth S. Janke Jr., +1-800-235-2667,
option 3, or fax, +1-706-324-6330, or , or Media, Laura Kane,
+1-706-596-3493, or fax, +1-706-320-2288, or , both of Aflac
Incorporated Web site: http://www.aflac.com/
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