Aflac Incorporated Announces Second Quarter Results, Declares Third Quarter Cash Dividend
July 26 2005 - 5:22PM
PR Newswire (US)
Aflac Incorporated Announces Second Quarter Results, Declares Third
Quarter Cash Dividend COLUMBUS, Ga., July 26 /PRNewswire-FirstCall/
-- Aflac Incorporated (NYSE:AFL) today reported its second quarter
results. Total revenues were up 10.3% to $3.6 billion in the second
quarter, reflecting a slightly stronger yen/dollar exchange rate
than a year ago. Net earnings were $336 million, or $.66 per
diluted share, compared with $258 million, or $.50 per share, a
year ago. Net earnings in the second quarter of 2005 included
realized investment gains of $7 million, or $.01 per diluted share,
compared with realized investment losses of $3 million, or $.01 per
diluted share, a year ago. Net earnings in the second quarter also
included a gain of $3 million, or $.01 per diluted share, resulting
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 second quarter of 2004, the impact
from SFAS 133 lowered net earnings by $23 million, or $.04 per
diluted share. 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 second quarter were $326 million, compared with
$284 million a year ago. On a per-share basis, operating earnings
rose 16.4% to $.64 per diluted share, compared with $.55 per share
in the second quarter of 2004. Excluding the benefit of $.01 per
share from the stronger yen to the dollar, operating earnings per
share increased 14.5% for the quarter. For the six months of 2005,
total revenues rose 9.4% to $7.1 billion. Net earnings were $664
million, or $1.30 per diluted share, compared with $563 million, or
$1.09 per share, for the first six months of 2004. Operating
earnings for the six months were $661 million, or $1.30 per diluted
share, compared with $569 million, or $1.10 per share, in 2004. The
board of directors declared the third quarter cash dividend. The
third quarter dividend of $.11 per share is payable on September 1,
2005, to shareholders of record at the close of business on August
19, 2005. Commenting on the company's second quarter and first-half
results, Chairman and Chief Executive Officer Daniel P. Amos
stated: "We are pleased with Aflac's financial performance during
the first half of 2005. Both Aflac U.S. and Aflac Japan have
produced solid growth this year, and we believe each operation is
on track to achieve its financial targets for the year. "Aflac U.S.
produced strong sales growth in the second quarter, with total new
annualized premium sales rising 9.2% to $307 million. Several
products contributed to our solid results. Once again, our
accident/disability product line was the largest sales contributor,
accounting for approximately 53% of second quarter sales. Other
products, including hospital indemnity and dental also sold well.
For the first half of the year, total new sales were up 3.5% to
$593 million. Our goal for the full year is a 3% to 8% increase in
total new annualized premium sales. "Aflac Japan's total new
annualized premium sales were consistent with our expectations for
the quarter. Total new sales rose 1.2% to 32.6 billion yen, or $302
million. As we expected, sales growth in the quarter was restrained
by significant declines in Rider MAX sales and conversions.
However, sales of our supplemental medical products were very
strong, increasing 29.4% over last year. Sales through Dai-ichi
Mutual Life dramatically improved, rising 19.2% over the second
quarter of 2004. For the first six months, total new annualized
premium sales were up 3.1% to 62.4 billion yen, or $587 million.
Our objective is to increase total new annualized premium sales in
yen by 5% to 10% for the full year. "We were encouraged to see
Aflac U.S. make significant strides in reestablishing better sales
growth during the second quarter. We believe our stronger sales and
more effective recruiting reflect the efforts of our enhanced sales
management infrastructure. We were also pleased with the continued
strength of our medical product line in Japan and our number one
position in the market for supplemental medical insurance. In
addition, both Aflac U.S. and Aflac Japan produced financial
results that were consistent with our expectations. As such, we
believe we are well-positioned to achieve our principal financial
target for 2005 of a 15% increase in operating earnings per share
before the impact of currency translation. "For 2006, our goal is
also to increase operating earnings per diluted share 15%,
excluding the impact of the yen. And in May we established a 2007
objective of a 13% to 16% increase in operating earnings per
diluted share before the effect of currency. We believe our
business is fundamentally strong, and we view our financial
objectives as a reflection of the opportunities we see for our
operations in the United States and 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 second quarter report to shareholders
can be found on the "For Investors" page of aflac.com. Aflac
Incorporated will webcast its second quarter conference call on the
"For Investors" page of aflac.com at 9:00 a.m. (EDT) on Wednesday,
July 27. AFLAC INCORPORATED AND SUBSIDIARIES CONSOLIDATED SUMMARY
OF EARNINGS (UNAUDITED - IN MILLIONS, EXCEPT FOR SHARE AND
PER-SHARE AMOUNTS) THREE MONTHS ENDED JUNE 30, 2005 2004* % Change
Total revenues $3,567 $3,233 10.3% Operating earnings 326 284 14.5
Reconciling items, net of tax: Realized investment gains (losses) 7
(3) Impact from SFAS 133 3 (23) Net earnings 336 258 29.9 Operating
earnings per share - diluted .64 .55 16.4 Reconciling items, net of
tax: Realized investment gains (losses) .01 (.01) Impact from SFAS
133 .01 (.04) Net earnings per share - diluted .66 .50 32.0 Net
earnings per share - basic .67 .51 31.4 Cash dividends paid per
share .11 .095 15.8 Shares used to compute earnings per share
(000): Basic 501,426 508,353 (1.4) Diluted 508,002 517,860 (1.9)
SIX MONTHS ENDED JUNE 30, Total revenues $7,127 $6,513 9.4%
Operating earnings 661 569 16.2 Reconciling items, net of tax:
Realized investment gains (losses) 9 3 Impact from SFAS 133 (6)
(12) Japanese pension obligation transfer - 3 Net earnings 664 563
18.0 Operating earnings per share - diluted 1.30 1.10 18.2
Reconciling items, net of tax: Realized investment gains (losses)
.01 - Impact from SFAS 133 (.01) (.02) Japanese pension obligation
transfer - .01 Net earnings per share - diluted 1.30 1.09 19.3 Net
earnings per share - basic 1.32 1.11 18.9 Cash dividends paid per
share .22 .19 15.8 Shares used to compute earnings per share (000):
Basic 502,063 509,138 (1.4) Diluted 508,722 518,607 (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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