COLUMBUS, Ga., Oct. 26, 2011 /PRNewswire/ -- Aflac Incorporated
today reported its third quarter results.
Reflecting the benefit from a stronger yen/dollar exchange rate,
revenues rose 11.0% to $6.0 billion
in the third quarter of 2011, compared with $5.4 billion in the third quarter of 2010. Net
earnings were $744 million, or
$1.59 per diluted share, compared
with $690 million, or $1.46 per share, a year ago.
(Logo: http://photos.prnewswire.com/prnh/20100423/CL92305LOGO
)
Net earnings in the third quarter of 2011 included pretax
realized investment losses of $83
million ($34 million
after-tax, or $.07 per diluted
share), compared with pretax gains of $9
million ($6 million after-tax,
or $.01 per diluted share), a year
ago. Several securities transactions, including the sale of the two
remaining holdings of the company's investments in Portuguese
financial institutions, Banco Espirito Santo S.A. and Caixa Geral
De Depositos S.A., a portion of its U.S. Treasury holdings, and
various Japanese National Government bonds (JGBs) that were part of
a swap program, produced a pretax gain of $307 million ($200
million after-tax, or $.43 per
diluted share). In addition, the company impaired certain debt and
perpetual securities including Dexia, BAWAG Capital Finance Jersey,
and Hypo Vorarlberg Capital Finance, resulting in a pretax loss of
$166 million ($108 million after-tax, or $.23 per diluted share). Realized investment
losses also included a pretax loss of $224
million ($145 million
after-tax, or $.31 per diluted share)
associated with foreign exchange and passive derivative
activities.
Aflac believes that an analysis of operating earnings, a
non-GAAP financial measure, is vitally important to an
understanding of the company's underlying profitability drivers.
Aflac defines operating earnings as the profits derived from
operations before realized investment gains and losses from
securities transactions, impairments, and derivative and hedging
activities, as well as nonrecurring items. Aflac's derivative
activities, which are primarily passive in nature, include foreign
currency, interest rate and credit default swaps in variable
interest entities that are consolidated, and securities with
embedded derivatives. Management uses operating earnings to
evaluate the financial performance of Aflac's insurance operations
because realized gains and losses from securities transactions,
impairments, and derivative and hedging activities, as well as
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.
Furthermore, because a significant portion of Aflac's business
is in Japan, where the functional
currency is the yen, the company believes it is equally important
to understand the impact on operating earnings from translating yen
into dollars. Aflac Japan's yen-denominated income statement is
translated from yen into dollars using an average exchange rate for
the reporting period, and the balance sheet is translated using the
exchange rate at the end of the period. However, except for a
limited number of transactions, the company does not actually
convert yen into dollars. As a result, Aflac views foreign currency
as a financial reporting issue and not as an economic event for the
company or its shareholders. Because changes in exchange rates
distort the growth rates of operations, readers of Aflac's
financial statements are also encouraged to evaluate financial
performance excluding the impact of foreign currency translation.
The chart toward the end of this release presents a comparison of
selected income statement items with and without foreign currency
changes to illustrate the effect of currency.
Operating earnings in the third quarter were $778 million, compared with $684 million in the third quarter of 2010.
Operating earnings per diluted share rose 14.5% to $1.66 in the quarter, compared with $1.45 a year ago. The stronger yen/dollar
exchange rate increased operating earnings per diluted share by
$.09 during the third quarter.
Excluding the impact from the stronger yen, operating earnings per
share increased 8.3%.
Results for the first nine months of 2011 also benefited from
the stronger yen. Total revenues were up 4.9% to $16.2 billion, compared with $15.4 billion in the first nine months of 2010.
Net earnings were $1.4 billion, or
$3.02 per diluted share, compared
with $1.9 billion, or $4.03 per share, for the first nine months of
2010. Operating earnings for the first nine months of 2011 were
$2.3 billion, or $4.86 per diluted share, compared with
$2.0 billion, or $4.21 per diluted share, in 2010. Excluding the
benefit of $.31 per share from the
stronger yen, operating earnings per diluted share rose 8.1% for
the first nine months of 2011.
Reflecting the benefit from a stronger yen/dollar exchange rate,
total investments and cash at the end of September 2011 were $100.8
billion, compared with $93.0
billion at June 30, 2011.
In the third quarter, Aflac repurchased 1.0 million shares of
its common stock, bringing the total number of shares repurchased
for the year to 5.1 million. At the end of September, the company
had 25.3 million shares available for purchase under its share
repurchase authorization.
Shareholders' equity was $12.7
billion at September 30, 2011,
compared with $12.0 billion at
June 30, 2011. Shareholders' equity
at the end of the third quarter included a net unrealized gain on
investment securities and derivatives of $708 million, compared with a net unrealized gain
of $758 million at the end of
June 2011. Shareholders' equity per
share was $27.25 at September 30, 2011, compared with $25.65 per share at June
30, 2011. The annualized return on average shareholders'
equity in the third quarter was 24.1%. On an operating basis
(excluding realized investment losses and the impact of derivative
gains/losses on net earnings, and unrealized investment and
derivative gains/losses in shareholders' equity), the annualized
return on average shareholders' equity was 26.8% for the third
quarter.
On January 1, 2012, the company
will adopt Accounting Standards Update 2010-26 (previously referred
to as EITF 09-G), an accounting standard that amends accounting for
costs associated with acquiring or renewing insurance contracts
(deferred acquisition costs, or DAC). These amended accounting
rules are intended to address the diversity in practice regarding
which costs qualify as deferred acquisition costs. Based on the
December 31, 2010 exchange rate, the
retrospective adoption of this accounting standard will result in
an estimated after-tax cumulative charge to the company's retained
earnings of $500 million to $700
million, or 4.5% to 6.3% of shareholder's equity as of
December 31, 2010. The company
currently estimates the adoption of this accounting standard will
result in an immaterial decrease in net income in 2011 and 2012 and
for all preceding years impacted by the retrospective adoption.
This accounting standard is not applicable to the company's
statutory reporting, nor will it impact the company's risk-based
capital or holding company liquidity position.
AFLAC JAPAN
Aflac Japan's total revenues in yen were up 4.8% in the third
quarter of 2011. Premium income in yen rose 5.4%, and net
investment income increased .9%. Investment income growth in yen
terms was suppressed by the stronger yen/dollar exchange rate
because approximately 34% of Aflac Japan's third quarter investment
income was dollar-denominated. The pretax operating profit margin
remained relatively unchanged from the third quarter of 2010 at
21.7%, and pretax operating earnings in yen increased 7.5%. For the
first nine months of the year, premium income in yen increased
5.1%, and net investment income declined 1.6%. Total revenues in
yen were up 4.1%, and pretax operating earnings grew 6.5%.
The average yen/dollar exchange rate in the third quarter of
2011 was 77.78, or 10.2% stronger than the average rate of 85.74 in
the third quarter of 2010. For the first nine months, the average
exchange rate was 80.48, or 11.0% stronger than the rate of 89.33 a
year ago. Aflac Japan's growth rates in dollar terms for both the
third quarter and first nine months were magnified as a result of
the stronger average yen/dollar exchange rates.
Reflecting the stronger yen, premium income in dollars rose
16.3% to $4.0 billion in the third
quarter. Net investment income was up 11.3% to $695 million. Total revenues increased 15.5% to
$4.7 billion. Pretax operating
earnings rose 18.5% to $1.0 billion.
For the first nine months, premium income was $11.5 billion, or 16.7% higher than a year ago.
Net investment income rose 9.4% to $2.0
billion. Total revenues were up 15.5% to $13.5 billion. Pretax operating earnings were
$2.9 billion, or 18.2% higher than a
year ago.
Aflac Japan again produced better-than-expected sales results.
New annualized premium sales rose 22.2% to 42.3 billion yen in the third quarter of 2011. In
dollar terms, new annualized premium sales were $544 million. Bank channel sales were again very
strong, generating 14.5 billion yen
in sales in the third quarter, which is an increase of 146.6% over
the third quarter of 2010. Sales of WAYS, the unique hybrid
whole-life product, increased 362.8% over the third quarter of
2010. As expected, the intense focus on WAYS, which is particularly
popular through the bank channel, impacted child endowment sales,
which were down 8.0% for the quarter. Following the March 2011 introduction of the new base cancer
policy DAYS, cancer sales increased 8.5% over the third quarter of
2010.
For the first nine months of the year, new annualized premium
sales were up 13.9% to 112.5 billion
yen, or $1.4 billion.
AFLAC U.S.
Aflac U.S. total revenues rose 4.0% to $1.3 billion in the third quarter. Premium income
increased 3.7% to $1.2 billion, and
net investment income was up 7.1% to $147
million. Pretax operating earnings were $220 million, a decrease of 3.8%. For the first
nine months, total revenues were up 3.7% to $4.0 billion and premium income rose 3.2% to
$3.5 billion. Net investment income
increased 8.5% to $439 million.
Pretax operating earnings were $719
million, or 2.7% higher than a year ago.
Aflac U.S. sales performed well for the third consecutive
quarter as targeted product and field force recruiting initiatives
continued to take hold. In the third quarter, new sales increased
5.0% to $340 million. Field force
recruiting benefited from targeted national advertising campaigns,
generating a 10.4% increase in recruits for the third quarter and
11.4% for the nine months. For the nine months, total new sales
increased 5.7% to $1.0 billion.
DIVIDEND
The board of directors declared the fourth quarter cash
dividend. The fourth quarter dividend of $.33 per share is payable on December 1, 2011, to shareholders of record at
the close of business on November 16,
2011. This represents a 10.0% increase in the quarterly cash
dividend effective with the fourth quarter payment.
OUTLOOK
Commenting on the company's third quarter results, Chairman and
Chief Executive Officer Daniel P.
Amos stated: "We are pleased with our overall results in the
third quarter of 2011. Aflac Japan sales greatly exceeded our
expectations, largely because of our ability to develop relevant
products such as WAYS that appeal to banks and Japanese consumers
alike. We are proud of Aflac Japan's remarkable results, especially
following two years of exceptional sales growth and the challenges
in 2011 resulting from the most devastating natural disaster in
Japan's history. Our outstanding
sales results in 2011 will create difficult comparisons in
2012.
"We were also pleased that Aflac U.S. continued to generate
strong sales results, despite the continued weakness in the U.S.
economy. Strategic coordination between our sales and marketing
areas, which are more closely aligned than ever, continues to
benefit our sales results. On the product side, sales have
benefited significantly from the addition of group products to our
Aflac U.S. product portfolio and strategic, coordinated sales and
marketing efforts. On the distribution side, Aflac U.S. has
continued to generate significant recruiting gains, which we
believe benefited from targeted advertising activities that promote
the Aflac sales opportunity. As a result of our positive
performance in both Japan and the
U.S., we posted strong consolidated financial results.
"As we have communicated over the past several years,
maintaining a strong risk-based capital, or RBC ratio, remains a
top priority for us. Although we have not yet completed our
statutory financial statements for the third quarter, we estimate
our RBC ratio will be within the range of 500% and 540% at the end
of September. Our strong capital position has enabled us to
increase our cash dividend for the 29th consecutive year. I am very
pleased with the action by the board of directors to increase the
quarterly dividend by 10.0%, effective with the fourth quarter of
2011. Our objective is to grow the dividend at a rate that's in
line with or somewhat better than earnings-per-share growth.
"With three quarters of the year complete, we continue to
believe we are positioned for another year of solid financial
performance. Throughout the year, both Aflac Japan and Aflac U.S.
have continued to do a very good job managing our operations,
including expense control. As we have stated previously, our
expectation was to increase spending in the last half of the year,
particularly on marketing and IT initiatives in the fourth quarter.
Despite our expectation for higher spending in the fourth quarter,
I am confident we will achieve our 2011 objective of growing
operating earnings per diluted share at 8%, excluding the impact of
the yen. If the yen averages 75 to 80 to the dollar for the last
three months of the year, we would expect reported operating
earnings for the fourth quarter to be in the range of $1.45 to $1.52 per diluted share. Under that
exchange rate assumption, we would expect full year operating
earnings of $6.30 to $6.37 per
diluted share.
"Looking ahead, I want to reiterate our expectation that 2012
operating earnings per diluted share will increase 2% to 5% on a
currency neutral basis. Furthermore, once the effects of our
proactive investment derisking program and low interest rates have
been integrated into our financial results, we believe the rate of
earnings growth in future years should improve."
ABOUT AFLAC
When a policyholder gets sick or hurt, Aflac pays cash benefits
fast. For more than 55 years, Aflac insurance policies have given
policyholders the opportunity to focus on recovery, not financial
stress. In the United States,
Aflac is the number one provider of guaranteed-renewable insurance.
In Japan, Aflac is the number one
life insurance company in terms of individual policies in force.
Aflac insurance products provide protection to more than 50 million
people worldwide. For five consecutive years, Aflac has been
recognized by Ethisphere magazine as one of the World's Most
Ethical Companies and by Forbes magazine as one of America's
Best-Managed Companies in the Insurance category. In 2011,
Fortune magazine recognized Aflac as one of the 100 Best
Companies to Work For in America for the thirteenth consecutive
year. Also, Fortune magazine included Aflac on its list of
Most Admired Companies for the tenth time in 2011. 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 or aflacenespanol.com.
A copy of Aflac's Financial Analysts Briefing (FAB) supplement
for the third quarter of 2011 can be found on the "Investors" page
at aflac.com, as well as a complete listing of Aflac's investment
holdings in the financial sector along with separate listings of
the company's sovereign and financial investments in both perpetual
and peripheral Eurozone securities.
Aflac Incorporated will webcast its third quarter conference
call via the "Investors" page of aflac.com at 9:00 a.m. (EDT) on Thursday, October 27, 2011.
|
|
|
AFLAC
INCORPORATED AND SUBSIDIARIES CONDENSED INCOME
STATEMENT
|
|
|
(UNAUDITED –
IN MILLIONS, EXCEPT FOR SHARE AND PER-SHARE AMOUNTS)
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED SEPTEMBER
30,
|
|
2011
|
|
|
2010
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
$
|
5,987
|
|
$
|
5,394
|
|
11.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Benefits and claims
|
|
3,517
|
|
|
3,102
|
|
13.4
|
|
|
|
|
|
|
|
|
|
|
|
|
Total acquisition and operating
expenses
|
|
1,365
|
|
|
1,237
|
|
10.3
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before income
taxes
|
|
1,105
|
|
|
1,055
|
|
4.8
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes
|
|
361
|
|
|
365
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
$
|
744
|
|
$
|
690
|
|
7.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per share –
basic
|
$
|
1.60
|
|
$
|
1.47
|
|
8.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per share –
diluted
|
|
1.59
|
|
|
1.46
|
|
8.9
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used to compute earnings
per share (000):
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
465,910
|
|
|
469,868
|
|
(.8)
|
%
|
|
|
Diluted
|
|
467,793
|
|
|
473,569
|
|
(1.2)
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid per
share
|
$
|
.30
|
|
$
|
.28
|
|
7.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AFLAC
INCORPORATED AND SUBSIDIARIES CONDENSED INCOME
STATEMENT
|
|
|
(UNAUDITED –
IN MILLIONS, EXCEPT FOR SHARE AND PER-SHARE AMOUNTS)
|
|
|
|
|
|
|
|
|
|
|
|
|
NINE MONTHS ENDED SEPTEMBER
30,
|
|
2011
|
|
|
2010
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
$
|
16,192
|
|
$
|
15,438
|
|
4.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Benefits and claims
|
|
10,049
|
|
|
8,843
|
|
13.6
|
|
|
|
|
|
|
|
|
|
|
|
|
Total acquisition and operating
expenses
|
|
3,985
|
|
|
3,677
|
|
8.4
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before income
taxes
|
|
2,158
|
|
|
2,918
|
|
(26.0)
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes
|
|
740
|
|
|
1,011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
$
|
1,418
|
|
$
|
1,907
|
|
(25.6)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per share –
basic
|
$
|
3.04
|
|
$
|
4.07
|
|
(25.3)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per share –
diluted
|
|
3.02
|
|
|
4.03
|
|
(25.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used to compute earnings
per share (000):
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
466,843
|
|
|
468,880
|
|
(.4)
|
%
|
|
|
Diluted
|
|
469,919
|
|
|
472,859
|
|
(.6)
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid per
share
|
$
|
.90
|
|
$
|
.84
|
|
7.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AFLAC
INCORPORATED AND SUBSIDIARIES CONDENSED BALANCE
SHEET
|
|
(UNAUDITED –
IN MILLIONS, EXCEPT FOR SHARE AMOUNTS)
|
|
|
|
|
|
|
|
|
|
|
SEPTEMBER 30,
|
|
2011
|
|
|
2010
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total investments and
cash
|
$
|
100,808
|
|
$
|
85,585
|
|
17.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Deferred policy acquisition
costs
|
|
10,575
|
|
|
9,418
|
|
12.3
|
|
|
|
|
|
|
|
|
|
|
|
|
Other assets
|
|
3,337
|
|
|
2,840
|
|
17.5
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
$
|
114,720
|
|
$
|
97,843
|
|
17.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and shareholders'
equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Policy liabilities
|
$
|
92,992
|
|
$
|
78,913
|
|
17.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Notes payable
|
|
3,301
|
|
|
3,008
|
|
9.7
|
|
|
|
|
|
|
|
|
|
|
|
|
Other liabilities
|
|
5,713
|
|
|
4,789
|
|
19.3
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity
|
|
12,714
|
|
|
11,133
|
|
14.2
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
$
|
114,720
|
|
$
|
97,843
|
|
17.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Shares outstanding at end of
period (000)
|
|
466,639
|
|
|
471,044
|
|
(.9)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF OPERATING
EARNINGS TO NET EARNINGS
|
|
(UNAUDITED –
IN MILLIONS, EXCEPT FOR PER-SHARE AMOUNTS)
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED SEPTEMBER
30,
|
|
2011
|
|
|
2010
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings
|
$
|
778
|
|
$
|
684
|
|
13.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Reconciling items, net of
tax:
|
|
|
|
|
|
|
|
|
|
Realized investment gains
(losses):
|
|
|
|
|
|
|
|
|
|
Securities
transactions and impairments
|
|
112
|
|
|
(3)
|
|
|
|
|
Impact of
derivative and hedging activities
|
|
(146)
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
$
|
744
|
|
$
|
690
|
|
7.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings per diluted
share
|
$
|
1.66
|
|
$
|
1.45
|
|
14.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Reconciling items, net of
tax:
|
|
|
|
|
|
|
|
|
|
Realized investment
gains (losses):
|
|
|
|
|
|
|
|
|
|
Securities
transactions and impairments
|
|
.24
|
|
|
(.01)
|
|
|
|
|
Impact of
derivative and hedging activities
|
|
(.31)
|
|
|
.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per diluted
share
|
$
|
1.59
|
|
$
|
1.46
|
|
8.9
|
%
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF OPERATING
EARNINGS TO NET EARNINGS
|
|
(UNAUDITED –
IN MILLIONS, EXCEPT FOR PER-SHARE AMOUNTS)
|
|
|
|
|
|
|
|
|
|
|
NINE MONTHS ENDED SEPTEMBER
30,
|
|
2011
|
|
|
2010
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings
|
$
|
2,282
|
|
$
|
1,990
|
|
14.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Reconciling items, net of
tax:
|
|
|
|
|
|
|
|
|
|
Realized investment gains
(losses):
|
|
|
|
|
|
|
|
|
|
Securities
transactions and impairments
|
|
(682)
|
|
|
(37)
|
|
|
|
|
Impact of
derivative and hedging activities
|
|
(182)
|
|
|
(46)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
$
|
1,418
|
|
$
|
1,907
|
|
(25.6)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings per diluted
share
|
$
|
4.86
|
|
$
|
4.21
|
|
15.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Reconciling items, net of
tax:
|
|
|
|
|
|
|
|
|
|
Realized investment
gains (losses):
|
|
|
|
|
|
|
|
|
|
Securities
transactions and impairments
|
|
(1.45)
|
|
|
(.08)
|
|
|
|
|
Impact of
derivative and hedging activities
|
|
(.39)
|
|
|
(.10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per diluted
share
|
$
|
3.02
|
|
$
|
4.03
|
|
(25.1)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF OPERATING
EARNINGS TO NET EARNINGS
|
|
(UNAUDITED –
IN MILLIONS, EXCEPT FOR PER-SHARE AMOUNTS)
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED SEPTEMBER
30,
|
|
2011
|
|
|
2010
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings
|
$
|
778
|
|
$
|
684
|
|
13.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Reconciling items, net of
tax:
|
|
|
|
|
|
|
|
|
|
Realized investment gains
(losses):
|
|
|
|
|
|
|
|
|
|
Securities
transactions and impairments
|
|
112
|
|
|
(3)
|
|
|
|
|
Impact of
derivative and hedging activities
|
|
(146)
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
$
|
744
|
|
$
|
690
|
|
7.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings per diluted
share
|
$
|
1.66
|
|
$
|
1.45
|
|
14.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Reconciling items, net of
tax:
|
|
|
|
|
|
|
|
|
|
Realized investment
gains (losses):
|
|
|
|
|
|
|
|
|
|
Securities
transactions and impairments
|
|
.24
|
|
|
(.01)
|
|
|
|
|
Impact of
derivative and hedging activities
|
|
(.31)
|
|
|
.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per diluted
share
|
$
|
1.59
|
|
$
|
1.46
|
|
8.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
EFFECT OF
FOREIGN CURRENCY ON OPERATING RESULTS(1)
|
|
(SELECTED
PERCENTAGE CHANGES, UNAUDITED)
|
|
|
|
|
|
THREE MONTHS
ENDED SEPTEMBER 30, 2011
|
Including
Currency
Changes
|
Excluding
Currency
Changes(2)
|
|
|
|
|
|
Premium income
|
13.1
|
%
|
5.1
|
%
|
|
|
|
|
|
|
|
Net investment
income
|
10.1
|
|
4.6
|
|
|
|
|
|
|
|
|
Total benefits and
expenses
|
12.5
|
|
4.7
|
|
|
|
|
|
|
|
|
Operating
earnings
|
13.7
|
|
7.2
|
|
|
|
|
|
|
|
|
Operating earnings per
diluted share
|
14.5
|
|
8.3
|
|
|
|
|
(1) The numbers in this table
are presented on an operating basis, as previously
described.
|
|
(2) Amounts excluding
currency changes were determined using the same yen/dollar
exchange
rate for the current period as
the comparable period in the prior year.
|
|
|
|
|
|
|
EFFECT OF
FOREIGN CURRENCY ON OPERATING RESULTS(1)
|
|
(SELECTED
PERCENTAGE CHANGES, UNAUDITED)
|
|
|
|
|
|
NINE MONTHS
ENDED SEPTEMBER 30, 2011
|
Including
Currency
Changes
|
Excluding
Currency
Changes(2)
|
|
|
|
|
|
Premium income
|
13.2
|
%
|
4.7
|
%
|
|
|
|
|
|
|
|
Net investment
income
|
9.2
|
|
3.3
|
|
|
|
|
|
|
|
|
Total benefits and
expenses
|
12.1
|
|
3.9
|
|
|
|
|
|
|
|
|
Operating
earnings
|
14.7
|
|
7.4
|
|
|
|
|
|
|
|
|
Operating earnings per
diluted share
|
15.4
|
|
8.1
|
|
|
|
|
(1) The numbers in this table
are presented on an operating basis, as previously
described.
|
|
(2) Amounts excluding currency
changes were determined using the same yen/dollar
exchange
rate for the current period as
the comparable period in the prior year.
|
|
|
|
|
|
|
|
|
|
|
2011
OPERATING EARNINGS PER SHARE SCENARIOS
|
|
|
|
Average
Exchange
Rate
|
Annual
Operating
EPS
|
|
%
Growth
Over 2010
|
|
Yen
Impact
|
|
|
|
|
|
|
|
|
75
|
|
$
|
6.61
|
|
19.5%
|
|
$
|
.64
|
|
|
|
|
|
|
|
|
|
|
|
80
|
|
|
6.34
|
|
14.6
|
|
|
.37
|
|
|
|
|
|
|
|
|
|
|
|
85
|
|
|
6.09
|
|
10.1
|
|
|
.12
|
|
|
|
|
|
|
|
|
|
|
|
87.69*
|
|
|
5.97
|
|
8.0
|
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
90
|
|
|
5.87
|
|
6.1
|
|
|
(.10)
|
|
|
|
|
|
|
|
|
|
|
|
95
|
|
|
5.68
|
|
2.7
|
|
|
(.29)
|
|
|
|
|
|
|
|
|
|
|
|
|
*Actual 2010 weighted-average exchange rate
FORWARD-LOOKING INFORMATION
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 communications 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,
could cause actual results to differ materially from those
contemplated by the forward-looking statements: difficult
conditions in global capital markets and the economy generally;
governmental actions for the purpose of stabilizing the financial
markets; defaults and downgrades in certain securities in our
investment portfolio; impairment of financial institutions; credit
and other risks associated with Aflac's investment in perpetual
securities; differing judgments applied to investment valuations;
subjective determinations of amount of impairments taken on our
investments; realization of unrealized losses; limited availability
of acceptable yen-denominated investments; concentration of our
investments in any particular sector or issuer; concentration of
business in Japan; ongoing changes
in our industry; exposure to significant financial and capital
markets risk; fluctuations in foreign currency exchange rates;
significant changes in investment yield rates; deviations in actual
experience from pricing and reserving assumptions; subsidiaries'
ability to pay dividends to the Parent Company; changes in law or
regulation by governmental authorities; ability to attract and
retain qualified sales associates and employees; ability to
continue to develop and implement improvements in information
technology systems; changes in U.S. and/or Japanese accounting
standards; decreases in our financial strength or debt ratings;
level and outcome of litigation; ability to effectively manage key
executive succession; catastrophic events including, but not
necessarily limited to, tornadoes, hurricanes, earthquakes,
tsunamis, and radiological disasters; and failure of internal
controls or corporate governance policies and procedures.
Analyst and investor contact – Robin Y.
Wilkey, 706.596.3264 or 800.235.2667, FAX: 706.324.6330, or
rwilkey@aflac.com
Media contact – Laura Kane,
706.596.3493, FAX: 706.320.2288, or lkane@aflac.com
SOURCE Aflac Incorporated