By Maria Armental
Aflac Inc.'s fourth-quarter operating profit fell 10.8%, hurt by
the impact of a weaker yen and higher expenses associated with
payroll changes in its U.S. sales force.
In October, Aflac year said it was making its independent sales
contractors in the U.S. salaried market directors. This is the
first quarter to report costs associated with the changes.
Founded in 1955 in Columbus, Ga., by brothers John, Paul, and
Bill Amos, and best known for its iconic duck branding mascot,
Aflac--American Family Life Assurance Company of Columbus--is the
largest insurance company in Japan, based on the number of
individual policies in place, and largest provider of supplemental
insurance in the U.S.
Aflac, which earns most of its revenue from Japan, has sought to
boost sales through new sales channels for its products. In 2013,
it expanded its partnership with Japan Post Holding Co. to sell
Aflac cancer-insurance policies at post offices, broadening its
distribution and access to new customers.
In yen terms, Aflac Japan's premium income edged up 0.2% in the
quarter, benefiting from a higher rate of investment income being
in dollars.
Insurance policies, as measured by new annualized premium sales,
rose 1.5% to 33.4 billion yen ($292 million). Third sector
sales--the foundation of Aflac Japan's portfolio, which include
cancer and medical products--rose 28.5%, while bank channel sales
fell 37.6%.
Meanwhile, premium income rose 1.2% to $1.3 billion in the U.S.
along with a 14.1% increase in new premium sales.
Overall, Aflac reported a profit of $703 million, or $1.57 a
share, compared with $675 million, or $1.45 a share, a year
earlier. Operating profit, which excludes hedging and other items,
fell to $1.29 a share from $1.40 a share.
Aflac had projected operating profit between $1.28 and $1.37 a
share.
Revenue decreased 5% to $5.51 billion, compared with the
consensus of $5.48 billion, according to analysts surveyed by
Thomson Reuters.
Aflac affirmed its projection for the year of per-share
operating profit to increase 2% to 7% on a currency-neutral basis.
Chief Executive Daniel P. Amos said in a statement he expects
third-sector sales in Japan to average a 15% increase and fall
sharply in the fourth quarter, and for sales to increase 3% to 7%
in the U.S., with a target of 5%.
Through the closing, the company's stock had fallen nearly 3%
over the past 12 months.
Write to Maria Armental at maria.armental@wsj.com
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