Aflac Incorporated Announces First Quarter Results, Declares Second Quarter Cash Dividend
April 26 2005 - 5:06PM
PR Newswire (US)
Aflac Incorporated Announces First Quarter Results, Declares Second
Quarter Cash Dividend COLUMBUS, Ga., April 26
/PRNewswire-FirstCall/ -- Aflac Incorporated (NYSE:AFL) today
reported its first quarter results. On January 1, 2005, Aflac
adopted the accounting standard SFAS 123R, which addresses
accounting for share-based transactions, such as stock options. The
company elected to adopt SFAS 123R using the modified-retrospective
transition method. As a result, 2004 results have been adjusted to
reflect the expensing of stock options. Total revenues, which
benefited from foreign currency translation, were $3.6 billion in
the first quarter, or 8.5% higher than a year ago. Net earnings in
the first quarter of 2005 were $328 million, or $.64 per share on a
diluted basis, compared with $304 million, or $.59 per diluted
share, a year ago. Net earnings included realized investment gains
of $2 million, compared with realized investment gains of $6
million, or $.01 per diluted share, a year ago. Net earnings in the
first quarter also included a loss of $9 million, or $.02 per
diluted share, from 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 first quarter of
2004, the impact from SFAS 133 benefited net earnings by $11
million, or $.02 per diluted share. Net earnings in the first
quarter of 2004 also reflected a one-time gain of $3 million, or
$.01 per diluted share, as a result of the transfer of certain
Aflac Japan pension obligations to the Japanese government. 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 may obscure the underlying fundamentals
and trends in Aflac's insurance operations. Operating earnings in
the first quarter of 2005 were a record $335 million, compared with
$284 million in the first quarter of 2004. Operating earnings per
diluted share rose 20.0% to $.66, compared with $.55 a year ago.
The stronger yen/dollar exchange rate increased operating earnings
per share by $.01 during the quarter. Excluding the impact from the
stronger yen, operating earnings per share increased 18.2%, which
was significantly better than our annual objective for operating
earnings per share growth in 2005. The board of directors declared
the second quarter cash dividend. The second quarter dividend of
$.11 per share is payable on June 1, 2005, to shareholders of
record at the close of business on May 20, 2005. Commenting on the
company's first quarter results, Chairman and Chief Executive
Officer Daniel P. Amos stated: "Overall, we had a solid start in
2005. We are especially pleased that operating earnings per share
growth before currency translation grew at a faster rate than our
primary financial target of a 15% increase. "Aflac Japan's total
new annualized premium sales rose 5.3% in the first quarter to 29.8
billion yen, or $285 million. These sales results were in line with
our expectations and our sales target for the year. As we expected,
sales growth was restrained by continued declines in Rider MAX. And
while sales through Dai-ichi Mutual Life declined for the quarter,
its results were better than we had expected. Excluding the
contribution from Dai-ichi Life, sales were up 6.3% for the
quarter. We were especially pleased that Aflac Japan produced very
strong sales of medical products. Medical sales rose 28.5% and
accounted for 40% of total new annualized premium sales for the
quarter, benefiting from the successful introduction of EVER Half
and EVER Bonus, our two new medical products. We believe agent and
consumer reception of our new products is further affirmation of
our number one position in the market for stand-alone medical
insurance products in Japan. Our objective for the year is a 5% to
10% increase in total new annualized premium sales in yen. "We were
encouraged that Aflac U.S. sales were in line with our expectations
for the quarter. Although total new annualized premium sales
declined 2.1% to $286 million in the first quarter, we had expected
a sales decline of up to 5% due primarily to a tough comparison to
2004. The difficult comparison resulted from fewer production days
in the first quarter of 2005, compared with a year ago. Had the
number of production days been the same in both quarters, we
estimate sales would have increased in line with our annual
objective. We were very pleased that new agent recruitment
continued to improve. During the first quarter, we recruited more
than 6,400 new sales associates, which was 10.3% above the first
quarter of 2004. At the end of the first quarter, Aflac U.S. was
represented by 60,300 licensed sales associates, or 4.6% higher
than a year ago. We believe we will see improved sales momentum as
the year progresses due in part to the continued expansion of our
sales force. And we are also optimistic that the introduction of a
new vision product will benefit sales in the second half of the
year. Our objective for the year is a 3% to 8% increase in total
new annualized premium sales. "As we think about the remainder of
this year and beyond, we are enthusiastic about the opportunities
for our operations in both the United States and Japan. The United
States remains a significant market for our products. And we
believe we can tap into that potential by further expansion of our
distribution system and product line, and enhanced training of our
sales force. We also believe we can maintain our strong position in
Japan's insurance market. With Japan's aging population and higher
out-of-pocket expenses, we are convinced that consumers will
increasingly turn to affordable products that provide 'living'
benefits. Aflac Japan is the market leader for living-benefit
products, and we believe we will maintain our number one position.
"We are also optimistic about achieving our financial objectives.
Our goal for 2005 is to increase operating earnings per diluted
share 15%, excluding foreign currency translation. Based on the
strength of our first quarter earnings, we believe we will have the
opportunity to increase our sales promotion activities for the
remainder of 2005 and still achieve our earnings objective for the
year. For 2006 our goal is to again produce 15% growth in operating
earnings per diluted share, excluding the impact of the yen. We
believe these financial objectives reasonably reflect the market
opportunities we see, as well as our expectation for continued
margin expansion for Aflac Japan." For 50 years, Aflac products
have given policyholders the opportunity to direct cash where it is
needed most when a life-interrupting medical event causes financial
challenges. Aflac is the number one provider of guaranteed-
renewable insurance in the United States and the number one
insurance company in terms of individual insurance policies in
force in Japan. Aflac's insurance products provide protection to
more than 40 million people worldwide. 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 both Forbes magazine's Platinum 400 List of
America's Best Big Companies and in Fortune magazine's listing of
America's Most Admired Companies for five 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. A copy of Aflac's First Quarter Report to Shareholders
can be found on the Investor Relations page of aflac.com. Aflac
Incorporated will webcast its first quarter conference call on the
Investor Relations page of aflac.com at 9:00 a.m. (EDT), Wednesday,
April 27. AFLAC INCORPORATED AND SUBSIDIARIES CONSOLIDATED SUMMARY
OF EARNINGS (UNAUDITED - IN MILLIONS, EXCEPT FOR SHARE AND
PER-SHARE AMOUNTS) THREE MONTHS ENDED MARCH 31, 2005 2004* % Change
Total revenues $3,559 $3,280 8.5% Operating earnings 335 284 17.9
Reconciling items, net of tax: Realized investment gains (losses) 2
6 Impact from SFAS 133 (9) 11 Japanese pension obligation transfer
- 3 Net earnings 328 304 7.9 Operating earnings per share - diluted
.66 .55 20.0 Reconciling items, net of tax: Realized investment
gains (losses) - .01 Impact from SFAS 133 (.02) .02 Japanese
pension obligation transfer - .01 Net earnings per share - diluted
.64 .59 8.5 Net earnings per share - basic .65 .60 8.3 Cash
dividends paid per share .11 .095 15.8 Shares used to compute
earnings per share (000): Basic 502,706 509,924 (1.4) Diluted
509,449 519,355 (1.9) * Adjusted to include stock option expense
resulting from adoption of SFAS 123R 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 included in the forward-looking statements.
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," "will," "assumes,"
"potential," "target," 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 and customer
response to new products and new marketing initiatives; 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 including, but not limited to, morbidity, mortality,
persistency, expenses, and investment yields; 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; ineffectiveness of hedging strategies
used to minimize the exposure of our shareholders' equity to
foreign currency translation fluctuations; events resulting in
catastrophic loss of life or injury; 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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