COLUMBUS, Ga., Oct. 27, 2016 /PRNewswire/ -- Aflac
Incorporated today reported its third quarter results.
Reflecting the stronger yen/dollar exchange rate, total revenues
increased 13.4% to $5.7 billion
during the third quarter of 2016, compared with $5.0 billion in the third quarter of 2015. Net
earnings were $629 million, or
$1.53 per diluted share, compared
with $567 million, or $1.32 per share, a year ago.
Net earnings in the third quarter of 2016 included $25 million, or $.06 per diluted share, of after-tax net realized
investment losses from securities transactions and impairments,
compared with net after-tax losses of $72
million, or $.16 per diluted
share, a year ago. Hedging costs related to certain dollar
investments of Aflac Japan on an after-tax basis were $122 million in the quarter, or $.30 per diluted share. Realized after-tax net
investment gains from other derivative and hedging activities in
the quarter were $40 million, or
$.10 per diluted share. In
addition, net earnings included an after-tax loss of $12 million, or $.03 per diluted share, from other and
nonrecurring items.
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, inclusive of interest cash flows associated with notes
payable, but before realized investment gains and losses from
securities transactions, impairments, and derivative and hedging
activities, as well as other and nonrecurring items. Aflac's
derivative activities are primarily used to hedge foreign exchange
and interest rate risk in the company's investment portfolio as
well as manage foreign exchange risk in certain notes payable and
forecasted cash flows denominated in yen. 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 other and nonrecurring items, tend to be driven by
general economic conditions and events or related to infrequent
activities not directly associated with the company's insurance
operations, and therefore may obscure the underlying fundamentals
and trends in Aflac's insurance operations. Due to the
unpredictable and uncontrollable nature of these reconciling items,
the company does not calculate a GAAP equivalent of its
forward-looking operating earnings guidance.
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 certain
transactions such as profit repatriation, settlements of
reinsurance retrocessions, and the Aflac Japan dollar investment
program, the company does not actually convert yen into dollars. As
a result, Aflac views foreign currency translation as a financial
reporting issue rather than 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.
The average yen/dollar exchange rate in the third quarter of
2016 was 102.37, or 19.3% stronger than the average rate of 122.15
in the third quarter of 2015. For the first nine months, the
average exchange rate was 108.58, or 11.3% stronger than the rate
of 120.81 a year ago. Aflac Japan's growth rates in dollar terms
for the third quarter and first nine months were magnified as a
result of the stronger yen/dollar exchange rate.
Operating earnings in the third quarter were $748 million, compared with $672 million in the third quarter of 2015.
Operating earnings per diluted share in the quarter increased 16.7%
from a year ago to $1.82. The
stronger yen/dollar exchange rate increased operating earnings per
diluted share by $.15 for the third
quarter. Excluding the impact from the stronger yen, operating
earnings per diluted share increased 7.1%.
Results for the first nine months of 2016 were also magnified by
the stronger yen. Total revenues were up 6.8% to $16.6 billion, compared with $15.6 billion in the first nine months of 2015.
Net earnings were $1.9 billion, or
$4.59 per diluted share, compared
with $1.8 billion, or $4.14 per diluted share, for the first nine
months of 2015. Operating earnings for the first nine months of
2016 were $2.2 billion, or
$5.25 per diluted share, compared
with $2.0 billion, or $4.60 per diluted share, in 2015. Excluding the
positive impact of $.26 per share
from the stronger yen, operating earnings per diluted share
increased 8.5% for the first nine months of 2016.
Total investments and cash at the end of September 2016 were $128.9
billion, compared with $126.0
billion at June 30, 2016.
In the third quarter, Aflac repurchased $200 million, or 2.7 million shares, of its
common shares. For the first nine months of the year, the company
repurchased $1.2 billion, or 18.8
million of its common shares. At the end of September, the company
had 29.6 million shares available for purchase under its share
repurchase authorizations.
Shareholders' equity was $22.8
billion, or $55.84 per share,
at September 30, 2016, compared with
$22.6 billion, or $54.98 per share, at June
30, 2016. Shareholders' equity at the end of the third
quarter included a net unrealized gain on investment securities and
derivatives of $6.1 billion, compared
with a net unrealized gain of $6.4
billion at the end of June
2016. The annualized return on average shareholders' equity
in the third quarter was 11.1%. On an operating basis (excluding
total net realized investment gains/losses in net earnings,
unrealized investment gains/losses, and derivative gains/losses in
shareholders' equity), the annualized return on average
shareholders' equity was 18.3% for the third quarter of 2016, or
15.1%, excluding the impact of the yen on operating earnings.
AFLAC JAPAN
In yen terms, Aflac Japan's premium income, net of reinsurance,
increased 1.1% in the third quarter. Net investment income
decreased 8.6%, as the stronger yen/dollar exchange rate
significantly impacted the reporting results of our
dollar-denominated income, with approximately 46% of Aflac Japan's
third quarter investment income dollar-denominated. Total revenues
were down .5% in the third quarter. The pretax operating profit
margin decreased in the third quarter to 20.7% from 21.9% in the
prior year, reflecting the effect of the stronger yen and an
increase in the benefit ratio in the quarter. Pretax operating
earnings in yen decreased 6.4% on a reported basis and decreased
.4% on a currency-neutral basis. For the first nine
months of the year, net premium income in yen increased 1.0% and
net investment income declined 5.2%. Total revenues in
yen were unchanged, and pretax operating earnings were down
2.8%.
Aflac Japan's growth rates in dollar terms for the third quarter
were magnified as a result of the significantly stronger yen/dollar
exchange rate. Net premium income increased 20.6% to $3.6 billion in the third quarter. Net investment
income was up 9.1% to $661 million.
Total revenues increased 18.7% to $4.3
billion. Pretax operating earnings increased 11.7% to
$882 million. For the first nine
months, net premium income was $10.2
billion, or 12.6% higher than a year ago. Net investment
income increased 5.6% to $1.9
billion. Total revenues were up 11.5% to $12.1 billion. Pretax operating earnings were
$2.6 billion, or 8.2% higher than a
year ago.
In the third quarter, total new annualized premium sales
decreased 16.2% to ¥26.5 billion, or $259
million. Third sector sales, which include cancer and
medical products, increased 2.5% in the quarter. Total first sector
sales, which include products such as WAYS and child endowment,
decreased 54.0% in the quarter.
For the first nine months of the year, new annualized premium
sales were down 1.4% to ¥87.9 billion, or $809 million. Third sector sales increased 5.0%
in the first nine months of the year.
AFLAC U.S.
In the third quarter, Aflac U.S. net premium income increased
1.4% to $1.4 billion. Net investment
income was up 1.7% to $176 million.
Total revenues increased 1.4% to $1.5
billion. Reflecting continued favorable claim trends, the
pretax operating profit margin was 20.9%, compared with 18.8% a
year ago. Pretax operating earnings were $323 million, an increase of 12.4% for the
quarter. For the first nine months, total revenues were up 2.1% to
$4.6 billion and net premium income
rose 1.9% to $4.1 billion. Net
investment income increased 3.7% to $526
million. Pretax operating earnings were $946 million, 9.5% higher than a year ago.
Aflac U.S. total new annualized premium sales decreased 1.8% in
the quarter to $324 million. For the
first nine months of the year, total new sales were up .9% to
$999 million.
DIVIDEND
The board of directors announced a 4.9% increase in the
quarterly cash dividend, effective with the fourth quarter payment.
The fourth quarter dividend of $.43
per share is payable on December 1,
2016, to shareholders of record at the close of business on
November 16, 2016.
OUTLOOK
Commenting on the company's third quarter results, Chairman and
Chief Executive Officer Daniel P.
Amos stated: "From a financial perspective, Aflac Japan
generated solid results in the third quarter and for the first nine
months. As you may recall, last month at our Tokyo Analysts
Briefing, we upwardly revised our annual third sector sales
expectations from a range of down 3% to up 2% to a range of flat to
up 5%. We are very pleased with third sector sales results for the
quarter and the first nine months of the year. Aflac Japan
generated a third sector sales increase of 2.5% for the quarter and
5% year to date, reflecting strong results despite facing difficult
comparisons. However, I would remind you that the fourth quarter
presents difficult comparisons. Long-term, we continue to believe
the compound annual growth rate for third sector sales will be in
the range of 4% to 6%. Turning to first sector sales, we are
encouraged by the significant progress we've made with our actions
to limit sales of our first sector products, especially given the
negative to low interest rate environment in Japan. First sector sales decreased 54% in the
quarter, which puts us well on our way to achieving our goal of
decreasing first sector sales at least 50% in the second half of
the year.
"From a financial perspective, Aflac U.S. produced strong
performance in the third quarter and for the first nine months.
While sales in the quarter were disappointing, I believe the
measures we've taken to strengthen our sales infrastructure are
laying the groundwork for better sales opportunities in the future.
I would also remind you that fourth quarter sales – and
particularly the last three weeks of the year – significantly
influence our annual sales results. Therefore, it becomes
increasingly challenging to project full-year sales, even after the
first nine months. Taking all these factors into consideration, we
believe Aflac U.S. will require a particularly strong fourth
quarter in order to meet the lower end of our 3% to 5% targeted
increase for 2016.
"We remain committed to maintaining strong capital ratios on
behalf of our policyholders. We believe our capital strength
positions us to repatriate in the range of ¥120 to ¥150 billion for
the calendar year 2016. We are on target to repurchase about
$1.4 billion of our common stock in
2016, with $1.2 billion already
repurchased during the first nine months.
"The board of directors' action to increase the dividend by 4.9%
demonstrates our commitment to reward our shareholders. This marks
the 34th consecutive year of increasing our cash
dividend. Our objective is to grow the dividend at a rate generally
in line with the increase in operating earnings per diluted share
before the impact of foreign currency translation.
"Having completed the first nine months of the year, I am
pleased with the company's overall results. We believe those
results, combined with our outlook for the remainder of 2016,
well-position Aflac for another year of solid financial
performance. As we continue to focus on initiatives designed to
drive future growth, our expectation is to increase spending in the
fourth quarter, particularly related to promotional and IT
initiatives. I am extremely pleased that we are upwardly revising
our 2016 operating earnings per diluted share outlook from a range
of $6.17 to $6.41 to a higher range
of $6.40 to $6.60, both of which
exclude the impact of the yen. If the yen averages ¥100 to ¥110 to
the dollar for the fourth quarter, we would expect operating
earnings, a non-GAAP measure, to be approximately $1.53 to $1.82 per diluted share in the fourth
quarter, making full-year operating earnings per diluted share
approximately $6.78 to $7.07 per
diluted share."
ABOUT AFLAC
When a policyholder gets sick or hurt, Aflac pays cash benefits
fast. For six decades, Aflac insurance policies have given
policyholders the opportunity to focus on recovery, not financial
stress. In the United States,
Aflac is the leading provider of voluntary insurance at the
worksite. Through its trailblazing One Day PaySM
initiative, Aflac U.S. can receive, process, approve and disburse
payment for eligible claims in one business day. In Japan, Aflac is the leading provider of
medical and cancer insurance and insures one in four households.
Aflac individual and group insurance products help provide
protection to more than 50 million people worldwide. For 10
consecutive years, Aflac has been recognized by Ethisphere
as one of the World's Most Ethical Companies. In 2016,
Fortune magazine recognized Aflac as one of the 100 Best
Companies to Work For in America for the 18th consecutive year and
included Aflac on its list of Most Admired Companies for the 15th
time, ranking the company No. 1 in innovation for the insurance,
life and health category for the second consecutive year. In 2015,
Aflac's contact centers were recognized by J.D. Power by providing
"An Outstanding Customer Service Experience" for the Live Phone
Channel. Aflac Incorporated is a Fortune 500 company listed on the
New York Stock Exchange under the symbol AFL. To find out more
about Aflac and One Day PaySM, visit aflac.com or
espanol.aflac.com.
A copy of Aflac's Financial Analysts Briefing (FAB) supplement
for the quarter can be found on the "Investors" page at
aflac.com.
Aflac Incorporated will webcast its quarterly conference call
via the "Investors" page of aflac.com at 9:00 a.m. (EDT) on Friday,
October 28, 2016.
AFLAC INCORPORATED
AND SUBSIDIARIES CONDENSED INCOME STATEMENT
|
(UNAUDITED – IN
MILLIONS, EXCEPT FOR SHARE AND PER-SHARE AMOUNTS)
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED
SEPTEMBER 30,
|
|
2016
|
|
|
2015
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
$
|
5,716
|
|
$
|
5,040
|
|
13.4
|
%
|
|
|
|
|
|
|
|
|
|
Benefits and claims,
net
|
|
3,378
|
|
|
2,927
|
|
15.4
|
|
|
|
|
|
|
|
|
|
|
Total acquisition and
operating expenses
|
|
1,375
|
|
|
1,249
|
|
10.2
|
|
|
|
|
|
|
|
|
|
|
Earnings before
income taxes
|
|
963
|
|
|
864
|
|
11.2
|
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
|
334
|
|
|
297
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
$
|
629
|
|
$
|
567
|
|
10.8
|
%
|
|
|
|
|
|
|
|
|
|
Net earnings per
share – basic
|
$
|
1.54
|
|
$
|
1.32
|
|
16.7
|
%
|
|
|
|
|
|
|
|
|
|
Net earnings per
share – diluted
|
|
1.53
|
|
|
1.32
|
|
15.9
|
|
|
|
|
|
|
|
|
|
|
Shares used to
compute earnings per share (000):
|
|
|
|
|
|
|
|
|
|
Basic
|
408,519
|
|
428,735
|
|
(4.7)
|
%
|
|
Diluted
|
411,140
|
|
431,102
|
|
(4.6)
|
|
|
|
|
|
|
|
|
|
|
Dividends paid per
share
|
$
|
.41
|
|
$
|
.39
|
|
5.1
|
%
|
AFLAC INCORPORATED
AND SUBSIDIARIES CONDENSED INCOME STATEMENT
|
(UNAUDITED – IN
MILLIONS, EXCEPT FOR SHARE AND PER-SHARE AMOUNTS)
|
|
|
|
|
|
|
|
|
NINE MONTHS ENDED
SEPTEMBER 30,
|
|
2016
|
|
|
2015
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
$
|
16,604
|
|
$
|
15,553
|
|
6.8
|
%
|
|
|
|
|
|
|
|
|
|
Benefits and claims,
net
|
|
9,657
|
|
|
8,816
|
|
9.5
|
|
|
|
|
|
|
|
|
|
|
Total acquisition and
operating expenses
|
|
4,033
|
|
|
3,985
|
|
1.2
|
|
|
|
|
|
|
|
|
|
|
Earnings before
income taxes
|
|
2,914
|
|
|
2,752
|
|
5.9
|
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
|
1,006
|
|
|
949
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
$
|
1,908
|
|
$
|
1,803
|
|
5.8
|
%
|
|
|
|
|
|
|
|
|
|
Net earnings per
share – basic
|
$
|
4.62
|
|
$
|
4.17
|
|
10.8
|
%
|
|
|
|
|
|
|
|
|
|
Net earnings per
share – diluted
|
|
4.59
|
|
|
4.14
|
|
10.9
|
|
|
|
|
|
|
|
|
|
|
Shares used to
compute earnings per share (000):
|
|
|
|
|
|
|
|
|
|
Basic
|
413,023
|
|
432,540
|
|
(4.5)
|
%
|
|
Diluted
|
415,446
|
|
435,064
|
|
(4.5)
|
|
|
|
|
|
|
|
|
|
|
Dividends paid per
share
|
$
|
1.23
|
|
$
|
1.17
|
|
5.1
|
%
|
AFLAC INCORPORATED
AND SUBSIDIARIES CONDENSED BALANCE SHEET
|
(UNAUDITED – IN
MILLIONS, EXCEPT FOR SHARE AMOUNTS)
|
|
|
|
|
|
|
|
|
SEPTEMBER
30,
|
|
2016
|
|
|
2015
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total investments and
cash
|
$
|
128,935
|
|
$
|
104,900
|
|
22.9
|
%
|
|
|
|
|
|
|
|
|
|
Deferred policy
acquisition costs
|
|
9,759
|
|
|
8,451
|
|
15.5
|
|
|
|
|
|
|
|
|
|
|
Other
assets
|
|
5,407
|
|
|
4,063
|
|
33.1
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
$
|
144,101
|
|
$
|
117,414
|
|
22.7
|
%
|
|
|
|
|
|
|
|
|
|
Liabilities and
shareholders' equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Policy
liabilities
|
$
|
105,556
|
|
$
|
87,185
|
|
21.1
|
%
|
|
|
|
|
|
|
|
|
|
Notes
payable
|
|
5,765
|
|
|
4,968
|
|
16.1
|
|
|
|
|
|
|
|
|
|
|
Other
liabilities
|
|
9,995
|
|
|
8,006
|
|
24.8
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity
|
|
22,785
|
|
|
17,255
|
|
32.1
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
$
|
144,101
|
|
$
|
117,414
|
|
22.7
|
%
|
|
|
|
|
|
|
|
|
|
Shares outstanding at
end of period (000)
|
|
408,021
|
|
|
427,567
|
|
(4.6)
|
%
|
|
RECONCILIATION OF
OPERATING EARNINGS TO NET EARNINGS
|
(UNAUDITED – IN
MILLIONS, EXCEPT FOR PER-SHARE AMOUNTS)
|
|
|
|
|
|
|
|
|
|
THREE MONTHS
ENDED SEPTEMBER 30,
|
|
2016
|
|
|
2015
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
|
Operating
earnings
|
$
|
748
|
|
$
|
672
|
|
11.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Reconciling items,
net of tax:*
|
|
|
|
|
|
|
|
|
|
Realized investment
gains (losses):
|
|
|
|
|
|
|
|
|
|
Securities transactions and
impairments
|
|
(25)
|
|
|
(72)
|
|
|
|
|
Hedge costs
related to
foreign
|
|
|
|
|
|
|
|
|
|
currency investments
|
|
(122)
|
|
|
(18)
|
|
|
|
|
Impact of other
derivative/hedging activities
|
|
40
|
|
|
2
|
|
|
|
|
Other and non-recurring income (loss)
|
|
(12)
|
|
|
(17)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
$
|
629
|
|
$
|
567
|
|
10.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings
per diluted share
|
$
|
1.82
|
|
$
|
1.56
|
|
16.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Reconciling items,
net of tax:*
|
|
|
|
|
|
|
|
|
|
Realized investment gains (losses):
|
|
|
|
|
|
|
|
|
|
Securities transactions and
impairments
|
|
(.06)
|
|
|
(.16)
|
|
|
|
|
Hedge
costs related to
foreign
|
|
|
|
|
|
|
|
|
|
currency
investments
|
|
(.30)
|
|
|
(.04)
|
|
|
|
|
Impact of other derivative/hedging activities
|
|
.10
|
|
|
–
|
|
|
|
|
Other and
non-recurring income (loss)
|
|
(.03)
|
|
|
(.04)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per
diluted share
|
$
|
1.53
|
|
$
|
1.32
|
|
15.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
*Reconciling items
are calculated net of a 35% tax rate.
|
RECONCILIATION OF
OPERATING EARNINGS TO NET EARNINGS
|
(UNAUDITED – IN
MILLIONS, EXCEPT FOR PER-SHARE AMOUNTS)
|
|
|
|
|
|
|
|
|
|
NINE MONTHS
ENDED SEPTEMBER 30,
|
|
2016
|
|
|
2015
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
|
Operating
earnings
|
$
|
2,182
|
|
$
|
2,001
|
|
9.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Reconciling items,
net of tax:*
|
|
|
|
|
|
|
|
|
|
Realized investment
gains (losses):
|
|
|
|
|
|
|
|
|
|
Securities transactions and
impairments
|
|
12
|
|
|
28
|
|
|
|
|
Hedge costs
related to
foreign
|
|
|
|
|
|
|
|
|
|
currency investments
|
|
(182)
|
|
|
(39)
|
|
|
|
|
Impact of other
derivative/hedging activities
|
|
(40)
|
|
|
(12)
|
|
|
|
|
Other and non-recurring income (loss)
|
|
(64)
|
|
|
(175)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
$
|
1,908
|
|
$
|
1,803
|
|
5.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings
per diluted share
|
$
|
5.25
|
|
$
|
4.60
|
|
14.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Reconciling items,
net of tax:*
|
|
|
|
|
|
|
|
|
|
Realized investment gains
(losses):
|
|
|
|
|
|
|
|
|
|
Securities transactions and
impairments
|
|
.03
|
|
|
.06
|
|
|
|
|
Hedge
costs related to
foreign
|
|
|
|
|
|
|
|
|
|
currency
investments
|
|
(.44)
|
|
|
(.09)
|
|
|
|
|
Impact of other derivative/hedging activities
|
|
(.10)
|
|
|
(.03)
|
|
|
|
|
Other and
non-recurring income (loss)
|
|
(.15)
|
|
|
(.40)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per
diluted share
|
$
|
4.59
|
|
$
|
4.14
|
|
10.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
*Reconciling items
are calculated net of a 35% tax rate.
|
EFFECT OF FOREIGN
CURRENCY ON OPERATING
RESULTS1 (SELECTED PERCENTAGE CHANGES, UNAUDITED)
|
|
|
|
THREE MONTHS ENDED
SEPTEMBER 30, 2016
|
Including Currency Changes
|
Excluding Currency Changes2
|
|
|
|
Net premium
income3
|
14.6
|
%
|
1.2
|
%
|
|
|
|
|
|
Net investment
income
|
7.3
|
|
–
|
|
|
|
|
|
|
Total benefits and
expenses
|
14.0
|
|
.6
|
|
|
|
|
|
|
Operating
earnings
|
11.3
|
|
2.2
|
|
|
|
|
|
|
Operating earnings
per diluted share
|
16.7
|
|
7.1
|
|
|
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.
|
3 Net of
reinsurance
|
EFFECT OF FOREIGN
CURRENCY ON OPERATING
RESULTS1 (SELECTED PERCENTAGE CHANGES, UNAUDITED)
|
|
|
|
NINE MONTHS ENDED
SEPTEMBER 30, 2016
|
Including Currency Changes
|
Excluding Currency Changes2
|
|
|
|
Net premium
income3
|
9.6
|
%
|
1.6
|
%
|
|
|
|
|
|
Net investment
income
|
5.2
|
|
.8
|
|
|
|
|
|
|
Total benefits and
expenses
|
8.9
|
|
.9
|
|
|
|
|
|
|
Operating
earnings
|
9.0
|
|
3.5
|
|
|
|
|
|
|
Operating earnings
per diluted share
|
14.1
|
|
8.5
|
|
|
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.
|
3 Net of
reinsurance
|
2016 OPERATING
EARNINGS PER SHARE1 SCENARIOS
|
|
|
Full-Year
Average
Exchange
Rate
|
|
|
Annual
Operating
EPS
|
|
|
% Growth
Over 2015
|
|
Yen
Impact
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100
|
|
|
$
|
7.24
|
-
|
7.44
|
|
17.5
|
-
|
20.8%
|
|
$
.84
|
|
|
|
|
|
|
|
|
|
|
|
|
|
105
|
|
|
|
6.94
|
-
|
7.14
|
|
12.7
|
-
|
15.9
|
|
.54
|
|
|
|
|
|
|
|
|
|
|
|
|
|
110
|
|
|
|
6.75
|
-
|
6.95
|
|
9.6
|
-
|
12.8
|
|
.35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
120.992
|
|
|
|
6.40
|
-
|
6.60
|
|
|
3.9
|
-
|
7.1
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 A
non-GAAP measure
|
|
2 Actual 2015 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; governmental
actions for the purpose of stabilizing the financial markets;
defaults and credit downgrades of securities in our investment
portfolio; exposure to significant interest rate risk;
concentration of business in Japan; limited availability of acceptable
yen-denominated investments; failure to comply with restrictions on
patient privacy and information security; foreign currency
fluctuations in the yen/dollar exchange rate; deviations in actual
experience from pricing and reserving assumptions; subsidiaries'
ability to pay dividends to Aflac Incorporated; ability to continue
to develop and implement improvements in information technology
systems; concentration of our investments in any particular
single-issuer or sector; decline in creditworthiness of other
financial institutions; ability to attract and retain qualified
sales associates and employees; differing judgments applied to
investment valuations; significant valuation judgments in
determination of amount of impairments taken on our investments;
credit and other risks associated with Aflac's investment in
perpetual securities; decreases in our financial strength or debt
ratings; inherent limitations to risk management policies and
procedures; extensive regulation and changes in law or regulation
by governmental authorities; interruption in telecommunication,
information technology and other operational systems, or a failure
to maintain the security, confidentiality or privacy of sensitive
data residing on such systems; catastrophic events including, but
not necessarily limited to, epidemics, pandemics, tornadoes,
hurricanes, earthquakes, tsunamis, acts of terrorism and damage
incidental to such events; changes in U.S. and/or Japanese
accounting standards; ability to effectively manage key executive
succession; level and outcome of litigation; increased expenses and
reduced profitability resulting from changes in assumptions for
pension and other postretirement benefit plans; ongoing changes in
our industry; loss of consumer trust resulting from events external
to our operations; 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 – Catherine Blades,
706.596.3014; FAX: 706.320.2288 or cblades@aflac.com
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SOURCE Aflac Incorporated