AFL AFLAC Inc

Aflac Inc. said its second-quarter operating earnings rose 8.6% as a stronger yen benefited the insurer's business in Japan, where the company generates most of its sales.

Operating earnings are a widely watched benchmark for the insurance industry because they exclude realized capital gains and losses from companies' investment portfolios, among other items that aren't considered recurring on a quarterly basis.

For the latest quarter, in U.S. dollar terms, premium income at Aflac's Japan business rose 14% to $3.4 billion, while revenue increased 13% to $4.1 billion and pretax operating earnings grew 11% to $839 million.

In yen terms, Japan segment premium income improved by 1.8%, revenue edged up 0.7% and pretax operating earnings fell 1%.

In the U.S., premium income grew 2.2% to $1.4 billion, while revenue increased 2.5% to $1.5 billion. Pretax operating earnings edged down 0.3% to $291 million.

Chairman and Chief Executive Daniel P. Amos said in prepared remarks that in the second half of the year, Aflac expects to increase spending to support growth efforts, particularly promotional and information-technology expenditures.

"The low interest-rate environment continues to be challenging for investments, especially with negative interest rates in Japan, making it difficult to invest cash flows at attractive yields while maintaining a prudent risk tolerance," Mr. Amos said.

Aflac's operating earnings were $707 million, or $1.71 a share, up from $651 million, or $1.50 a share, a year earlier. Revenue increased 2.8% to $5.44 billion.

Analysts polled by Thomson Reuters expected per-share operating profit of $1.68 and revenue of $5.45 billion.

Over all, Aflac reported a profit of $548 million, down from $573 million. On a per-share basis, earnings were flat at $1.32 on fewer shares outstanding.

Aflac also affirmed its 2016 operating earnings outlook of $6.17 a share to $6.41 a share.

Write to Tess Stynes at tess.stynes@wsj.com

(END) Dow Jones Newswires

July 28, 2016 18:05 ET (22:05 GMT)

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