COLUMBUS, Ga., Jan. 30 /PRNewswire-FirstCall/ -- Aflac Incorporated
today reported its fourth quarter results. Total revenues were $3.6
billion in the fourth quarter of 2005, or 3.5% higher than the
fourth quarter of 2004. Net earnings were $364 million, or $.72 per
diluted share, compared with $410 million, or $.80 per share, a
year ago. Net earnings in the fourth quarter of 2005 included
realized investment gains of $68 million, or $.14 per diluted
share, compared with realized investment losses of $4 million, or
$.01 per share, a year ago. The significant realized investment
gains in the quarter resulted from the bond- swap program we
initiated in the third quarter. In addition, net earnings in the
fourth quarter included a loss of $2 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 fourth quarter of
2004, the impact from SFAS 133 reduced net earnings by $7 million,
or $.01 per share. Net earnings in the fourth quarter of 2004
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 may obscure the underlying fundamentals
and trends in Aflac's insurance operations. Operating earnings in
the fourth quarter were $298 million, compared with $293 million a
year ago. On a per-share basis, operating earnings rose 3.5% to
$.59 per diluted share, compared with $.57 per share in the fourth
quarter of 2004. Operating earnings reflected an after-tax charge
of $18 million, or $.03 per diluted share, for writing off the
remaining portion of previously capitalized system development
costs in Japan. In addition, the significantly weaker yen/dollar
exchange rate compared with a year ago reduced operating earnings
per share by $.03 in the quarter. For the year, total revenues rose
8.1% to $14.4 billion in 2005. Net earnings were $1.5 billion, or
$2.92 per diluted share, compared with $1.3 billion, or $2.45 per
share, a year ago. Operating earnings were $1.3 billion, or $2.54
per diluted share, compared with $1.2 billion, or $2.23 per share,
in 2004. Excluding the negative impact of $.02 per share from the
weaker yen, operating earnings per diluted share rose 14.8% to
$2.56, which was our objective for the year. Pending approval by
the board of directors, Aflac will increase its quarterly cash
dividend 18.2% from $.11 per share to $.13 per share. At its
meeting on February 14, 2006, the board of directors will consider
the dividend increase, which would take effect in the first quarter
of 2006. If approved, the first quarter dividend will be payable on
March 1, 2006, to shareholders of record at the close of business
on February 17, 2006, and will mark the 24th consecutive year in
which the dividend has been increased. Commenting on the company's
results, Chairman and Chief Executive Officer Daniel P. Amos
stated: "The final quarter of 2005 concluded another record year
for Aflac. The sales and financial results for Aflac U.S. and Aflac
Japan were in line with our expectations. In fact, the continued
financial strength of our operations allowed us to significantly
increase our advertising expenditures in both markets during the
fourth quarter. More importantly, we still achieved our earnings
growth objective for the year. And we are especially proud that
2005 marked the 16th consecutive year in which we have met or
exceeded our target for earnings-per-share growth. "Aflac Japan's
total new annualized premium sales in the fourth quarter increased
6.1% from a year ago to 35.4 billion yen, or $302 million. For the
year, total new annualized premium sales were up 5.1% to 128.8
billion yen, or $1.2 billion, which was in line with our objective
for the year. We again produced strong growth from our stand-alone
medical products. Sales from our EVER product line rose 19.6% over
the fourth quarter of 2004 and accounted for 34% of total new
sales. Dai-ichi Mutual Life posted strong results, with a sales
increase of 31.2% over the fourth quarter of 2004. However, as
expected, fourth quarter results also reflected sharp declines in
Rider MAX sales. For 2006, we anticipate lower Rider MAX sales and
weaker conversions will continue to restrain sales growth.
Nevertheless, we expect to generate solid sales growth from our
medical products. As a result, we believe sales will increase 5% to
8% in 2006. "We continued to be pleased with the sales results of
Aflac U.S. Total new annualized premium sales rose 7.5% to a record
$369 million in the fourth quarter. Our accident/disability and
cancer expense products remained the primary contributors to sales,
accounting for a combined 70% of total sales in the quarter. We
were also pleased with the sales of our most recent product
introduction, Vision Now. This unique product, which was launched
in July, provides both vision correction and general eye health
benefits. Sales from Vision Now were $9 million in the fourth
quarter. For the full year, total new sales were up 6.1% to $1.3
billion, which was in line with our annual target of a 3% to 8%
increase. Our objective for 2006 is to increase total new sales 8%
to 12%. "We were also pleased with the growth of our U.S. sales
force in the quarter. We recruited more than 5,200 new sales
associates during the fourth quarter, or 7.5% higher than a year
ago. For the full year, new agent recruitment rose 8.0%, which was
consistent with our expectation of a 5% to 10% increase for 2005.
We also continued our emphasis on training in order to improve
producing agent growth. By the end of the year, we had introduced
our new Coordinator in Training program to 64 of our 95 state sales
organizations. "We remain enthusiastic about the opportunities we
see for continued growth in the United States and Japan. We believe
both markets are well- suited to our products and distribution
systems. Furthermore, record sales results in the United States in
2005 reinforce our belief that we have been taking the appropriate
steps to improve our sales growth. To that end, we will continue to
focus on the distribution side of our business model to help us
achieve our sales objectives and improve our operation in the long
term. Despite a more competitive marketplace in Japan, we believe
Aflac continues to stand out in terms of product value. And we also
believe our successful product launches in Japan last year and the
strong sales from our core medical product line exemplify our
leading market position. "In addition to positioning Aflac for
future growth, we also spent considerable time over the last year
assessing our practice of disclosing earnings targets. As we
suggested at our analyst meeting last May, our primary concern is
to balance our desire to provide earnings guidance with the
potential risks of doing so. After giving consideration to the
current legal and regulatory environment, we have determined we
will provide earnings guidance for 1 1/2 years rather than the 2
1/2-year projections we had previously provided. We are not taking
this action because our business has become less predictable. To
the contrary; the business attributes that have enabled us to
accurately assess our future earnings potential remain intact
today. However, given the potential risks to our company and
shareholders, we believe it is not prudent to provide longer-term
projections. "We have retained our objective for increasing
operating earnings per diluted share 15% to $2.92 before the impact
of foreign currency translation in 2006. In May 2005, we
established a 2007 objective of a 13% to 16% increase in operating
earnings per diluted share before the effect of currency. Based on
the development of our business since that time, we now believe it
is reasonable to produce a 15% to 16% increase in operating
earnings per diluted share in 2007 before currency fluctuations. We
believe our financial modeling is sound and our modeling
assumptions reasonable. And we believe that achieving our targets
will be rewarding to our shareholders." 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
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 2006, Aflac was included in
Fortune magazine's list of the 100 Best Companies to Work For in
America for the eighth 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
(NYSE:AFL) 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 fourth quarter report to shareholders
can be found on the "For Investors" page of aflac.com. Aflac
Incorporated will webcast its fourth quarter analyst presentation
on the "For Investors" page of aflac.com on Tuesday, January 31,
2006, at 7:10 p.m. EST. AFLAC INCORPORATED AND SUBSIDIARIES
CONSOLIDATED SUMMARY OF EARNINGS (UNAUDITED - IN MILLIONS, EXCEPT
FOR SHARE AND PER-SHARE AMOUNTS) THREE MONTHS ENDED DECEMBER 31,
2005 2004* % Change Total revenues $3,567 $3,448 3.5% Operating
earnings 298 293 1.8 Reconciling items, net of tax: Realized
investment gains (losses) 68 (4) Impact from SFAS 133 (2) (7)
Release of deferred tax asset valuation allowance - 128 Net
earnings 364 410 (11.1) Operating earnings per share - diluted .59
.57 3.5 Reconciling items, net of tax: Realized investment gains
(losses) .14 (.01) Impact from SFAS 133 (.01) (.01) Release of
deferred tax asset valuation allowance - .25 Net earnings per share
- diluted .72 .80 (10.0) Net earnings per share - basic .73 .81
(9.9) Cash dividends paid per share .11 .095 15.8 Shares used to
compute earnings per share (000): Basic 499,112 504,495 (1.1)
Diluted 506,084 512,934 (1.3) TWELVE MONTHS ENDED DECEMBER 31, 2005
2004* % Change Total revenues $14,363 $13,281 8.1% Operating
earnings 1,292 1,153 12.0 Reconciling items, net of tax: Realized
investment gains (losses) 167 (5) Impact from SFAS 133 (10) (13)
Release of deferred tax asset valuation allowance 34 128 Japanese
pension obligation transfer - 3 Net earnings 1,483 1,266 17.2
Operating earnings per share - diluted 2.54 2.23 13.9 Reconciling
items, net of tax: Realized investment gains (losses) .33 (.01)
Impact from SFAS 133 (.02) (.03) Release of deferred tax asset
valuation allowance .07 .25 Japanese pension obligation transfer -
.01 Net earnings per share - diluted 2.92 2.45 19.2 Net earnings
per share - basic 2.96 2.49 18.9 Cash dividends paid per share .44
.38 15.8 Shares used to compute earnings per share (000): Basic
500,939 507,333 (1.3) Diluted 507,704 516,421 (1.7) *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. (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 First Call Analyst: FCMN Contact:
bbarfield@aflac.com
http://www.newscom.com/cgi-bin/prnh/20041202/CLTH019LOGO
http://photoarchive.ap.org/ DATASOURCE: Aflac Incorporated CONTACT:
Analyst 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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