COLUMBUS, Ga., Oct. 24 /PRNewswire-FirstCall/ -- Aflac Incorporated
(NYSE:AFL) today reported its third quarter results. (Logo:
http://www.newscom.com/cgi-bin/prnh/20041202/CLTH019LOGO) Total
revenues were $3.7 billion in the third quarter, or 10.5% higher
than a year ago. Net earnings were $455 million, or $.90 per
diluted share, compared with $293 million, or $.57 per share, a
year ago. Net earnings in the third quarter of 2005 included
realized investment gains of $89 million, or $.18 per diluted
share, compared with realized investment losses of $5 million, or
$.01 per share, a year ago. The significant realized investment
gains in the quarter resulted from the execution of bond swaps that
were designed to take advantage of tax loss carryforwards and
improve investment income in future periods. In addition, net
earnings in the third quarter included a loss of $1 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 third
quarter of 2004, the impact from SFAS 133 increased net earnings by
$6 million, or $.01 per diluted share. Net earnings in the third
quarter of 2005 benefited by $34 million, or $.07 per diluted
share, from the release of a valuation allowance for deferred tax
assets. 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 third quarter were $333 million, compared with $292
million a year ago. On a per-share basis, operating earnings rose
15.8% to $.66 per diluted share, compared with $.57 per share in
the third quarter of 2004. Although the yen was slightly weaker to
the dollar compared with the third quarter of 2004, the impact of
foreign currency translation on a per- share basis was not material
in the quarter. For the first nine months of 2005, total revenues
rose 9.8% to $10.8 billion. Net earnings were $1.1 billion, or
$2.20 per diluted share, compared with $856 million, or $1.65 per
share, a year ago. Operating earnings were $994 million, or $1.96
per diluted share, compared with $860 million, or $1.66 per share,
in 2004. Although the yen weakened to the dollar in the third
quarter, the yen was slightly stronger than a year ago for the nine
months. Excluding the benefit of $.02 per diluted share from the
stronger yen, operating earnings per share increased 16.9% for the
first nine months of 2005, which is ahead of our annual target of a
15% increase before the effect of the yen. The board of directors
declared the fourth quarter cash dividend of $.11 per share. The
dividend is payable on December 1, 2005, to shareholders of record
at the close of business on November 18, 2005. Commenting on the
company's results, Chairman and Chief Executive Officer Daniel P.
Amos stated: "We are very pleased with our financial performance
for the third quarter and first nine months of 2005. "Aflac Japan's
total new annualized premium sales in the third quarter increased
8.2% from a year ago to 31.0 billion yen, or $278 million. We were
pleased that our rate of sales growth improved significantly over
the second quarter. For the first nine months of 2005, total new
annualized premium sales were up 4.7% to 93.4 billion yen, or $865
million. As expected, sales growth was restrained by continued
sharp declines in Rider MAX sales. However, we again produced
significant increases in the sale of our medical products. Sales of
our popular EVER products rose 31.7% in the quarter and accounted
for 38% of Aflac Japan's total new sales. Dai-ichi Mutual Life's
sales of our cancer life product were also very strong, rising
19.0% over the third quarter of 2004. Our objective for the full
year is to increase total new annualized premium sales 5% to 10%.
"Aflac U.S. produced strong sales results in the third quarter.
Although Hurricanes Katrina and Rita held back sales growth during
September, total new annualized premium sales still rose 10.0% to
$297 million in the third quarter. We were especially pleased with
the initial market reception of Vision Now, our new vision product.
We began rolling out this innovative new product in July, and third
quarter sales were more than $8 million, which exceeded our
expectations. For the first nine months of the year, total new
sales were up 5.6% to $890 million. Our goal for the full year
remains a 3% to 8% increase in total new annualized premium sales.
Recruitment of new sales associates slowed compared with the first
half of the year. We recruited more than 5,700 new associates
during the third quarter, which was 2.5% higher than a year ago. We
believe recruitment in the quarter was impacted in part by the
rollouts of our new vision and hospital indemnity products and the
introduction of new training programs. However, new agent
recruitment through the first nine months of the year rose 8.2%,
which is consistent with our expectation of a 5% to 10% increase
for the year. "Overall, Aflac's sales and financial performance for
the third quarter and first nine months of 2005 have been
gratifying. We were especially pleased to see Aflac U.S. post
strong sales, and we believe we are making steady progress at
reestablishing better sales growth. To produce sustainable sales
momentum, we will continue our intense focus on the distribution
side of our business model. Through ongoing recruiting efforts and
new and more effective training programs, we are striving to expand
the number of producing sales associates, and therefore sales
growth, in the future. We were also pleased with Aflac Japan's
marketing strength. Despite an increased number of competing
products in the market, Aflac Japan produced strong medical sales
growth in the quarter and through the first nine months of the
year. And in the process, Aflac has retained its leading position
as the number one seller of supplemental medical insurance policies
in Japan. "As we look to the balance of the year and beyond, we
remain enthusiastic about growth opportunities for Aflac U.S. and
Aflac Japan. We believe aging populations and increased
out-of-pocket expenses for consumers in both markets will continue
to drive demand for our products. We also remain optimistic about
achieving our financial goals. Our objective for 2005 is to
increase operating earnings per diluted share 15% before the impact
of foreign currency translation. Based on the strong results we
have produced so far this year, we plan on increasing our sales
promotion activities in the fourth quarter. However, we still
expect to meet or exceed our earnings objective for the year. At
the same time, we have retained our objectives of 15% growth in
operating earnings per diluted share before the impact of the yen
for 2006, and 13% to 16% growth before currency fluctuations in
2007. When we established these financial objectives, we did so
using what we considered to be reasonable assumptions. In light of
our current results and the overall strength of our operations, we
still consider those assumptions to be reasonable, and we also
believe our earnings objectives are achievable." 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. Aflac has been included in
both Fortune magazine's listing of America's Most Admired Companies
and Forbes magazine's Platinum 400 List of America's Best Big
Companies for five consecutive years. 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 was
also included in Fortune magazine's list of the Top 50 Employers
for Minorities in August 2005, and in September 2005, Aflac Japan
was named the Life Insurance Company of the Year at the Asia
Insurance Industry Awards, sponsored by the Asia Insurance Review.
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 third quarter report to
shareholders can be found on the "For Investors" page of aflac.com.
Aflac Incorporated will webcast its third quarter conference call
on the "For Investors" page of aflac.com on Tuesday, October 25 at
1:30 p.m. (EDT). AFLAC INCORPORATED AND SUBSIDIARIES CONSOLIDATED
SUMMARY OF EARNINGS (UNAUDITED - IN MILLIONS, EXCEPT FOR SHARE AND
PER-SHARE AMOUNTS) THREE MONTHS ENDED SEPTEMBER 30, 2005 2004* %
Change Total revenues $3,669 $3,321 10.5% Operating earnings 333
292 14.2 Reconciling items, net of tax: Realized investment gains
(losses) 89 (5) Impact from SFAS 133 (1) 6 Release of deferred tax
asset valuation allowance 34 - Net earnings 455 293 55.2 Operating
earnings per share - diluted .66 .57 15.8 Reconciling items, net of
tax: Realized investment gains (losses) .18 (.01) Impact from SFAS
133 (.01) .01 Release of deferred tax asset valuation allowance .07
- Net earnings per share - diluted .90 .57 57.9 Net earnings per
share - basic .91 .58 56.9 Cash dividends paid per share .11 .095
15.8 Shares used to compute earnings per share (000): Basic 500,557
506,599 (1.2) Diluted 507,323 515,576 (1.6) NINE MONTHS ENDED
SEPTEMBER 30, Total revenues $10,796 $9,834 9.8% Operating earnings
994 860 15.5 Reconciling items, net of tax: Realized investment
gains (losses) 99 (1) Impact from SFAS 133 (8) (6) Release of
deferred tax asset valuation allowance 34 - Japanese pension
obligation transfer - 3 Net earnings 1,119 856 30.7 Operating
earnings per share - diluted 1.96 1.66 18.1 Reconciling items, net
of tax: Realized investment gains (losses) .19 (.01) Impact from
SFAS 133 (.02) (.01) Release of deferred tax asset valuation
allowance .07 - Japanese pension obligation transfer - .01 Net
earnings per share - diluted 2.20 1.65 33.3 Net earnings per share
- basic 2.23 1.68 32.7 Cash dividends paid per share .33 .285 15.8
Shares used to compute earnings per share (000): Basic 501,555
508,286 (1.3) Diluted 508,250 517,591 (1.8) *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; catastrophic events; and general
economic conditions in the United States and Japan. 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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