AFLAC Earned $1.53 per Share for Q1

Aflac (AFL) today reported its first quarter results:

Total revenues were $5.9 billion in the first quarter of 2021 compared with $5.2 billion in the first quarter of 2020. Net earnings were $1.3 billion, or $1.87 per diluted share, compared with $566 million, or $0.78 per diluted share a year ago, driven by higher net investment gains.

Net earnings in the first quarter of 2021 included pretax adjusted net investment gains* of $304 million, or $0.44 per diluted share, compared with pretax adjusted net investment losses of $448 million, or $0.62 per diluted share a year ago, which are excluded from adjusted earnings. The adjusted net investment gains were driven by net gains from certain derivatives and foreign currency activities of $361 million and a decrease in the allowances associated with the company’s estimate of current expected credit gains (CECL) of $22 million, offset by a decrease in the fair value of equity securities of $68 million and net losses of $11 million from sales and redemptions.

The average yen/dollar exchange rate* in the first quarter of 2021 was 105.88, or 2.8% stronger than the average rate of 108.84 in the first quarter of 2020.

Total investments and cash at the end of March 2021 were $143.3 billion, compared with $137.0 billion at March 31, 2020. In the first quarter, Aflac Incorporated repurchased $650 million, or 13.4 million of its common shares. At the end of March 2021, the company had 85.7 million remaining shares authorized for repurchase.

Shareholders’ equity was $32.1 billion, or $47.16 per share, at March 31, 2021, compared with $26.4 billion, or $36.75 per share, at March 31, 2020. Shareholders’ equity at the end of the first quarter included a net unrealized gain on investment securities and derivatives of $8.8 billion, compared with a net unrealized gain of $6.0 billion at March 31, 2020. Shareholders’ equity at the end of the first quarter also included an unrealized foreign currency translation loss of $1.7 billion, compared with an unrealized foreign currency translation loss of $1.5 billion at March 31, 2020. The annualized return on average shareholders’ equity in the first quarter was 15.8%.

Adjusted earnings* in the first quarter were $1.1 billion, compared with $882 million in the first quarter of 2020, reflecting an increase of 20.0% driven by lower-than-expected benefit ratios in the United States and favorable effective tax rates. Adjusted earnings included pretax variable investment income of $34 million on alternative investments, which was $25 million above long-term return expectations. Adjusted earnings per diluted share* increased 26.4% to $1.53 in the quarter. The stronger yen/dollar exchange rate impacted adjusted earnings per diluted share by $0.02.

Shareholders’ equity excluding AOCI* was $25.3 billion, or $37.16 per share at March 31, 2021, compared with $22.2 billion, or $30.92 per share, at March 31, 2020. The annualized adjusted return on equity excluding foreign currency impact* in the first quarter was 16.7%.

OUTLOOK

Commenting on the company’s results, Chairman and Chief Executive Officer Daniel P. Amos stated: “While earnings are off to a strong start for the year, they are largely supported by low benefit ratios associated with pandemic conditions. In addition, pandemic conditions in the first quarter continued to impact our sales results both in the United States and Japan, as well as earned premium and revenues. We continue to expect these pandemic conditions to remain with us through the first half of 2021, but look for improvement in the second half of the year as communities and businesses open up, allowing more face-to-face interactions. We are encouraged by the production and distribution of COVID-19 vaccines, but we also recognize that vaccination efforts are still in the early stages around the world. In the interim, we are cautiously optimistic and remain vigilant, and our thoughts and prayers are with everyone affected.

“Looking at our operations in Japan, sales were essentially flat for the first quarter with the launch of our new medical product, offset by continued pandemic conditions. While we continue to navigate evolving pandemic conditions in Japan, we expect continued strength in medical sales. In addition, Japan Post Group’s announcement to resume proactive sales in April paves the way for gradual improvement in Aflac cancer insurance sales in the second half of the year. In the U.S., small businesses are still in recovery mode, and we expect that they will be for most of 2021. At the same time, larger businesses remain focused on returning employees to the worksite, rather than modifying the benefits for their employees. As a result, we continue to work toward reinforcing our position and a recovery in U.S. sales in the second half of 2021.”

Posted by on April 28th, 2021 at 4:09 pm


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