COLUMBUS, Ga., Jan. 31, 2017 /PRNewswire/ -- Aflac
Incorporated today reported its fourth quarter results.
Reflecting the stronger yen/dollar exchange rate, total revenues
increased 12.0% to $6.0 billion
during the fourth quarter of 2016, compared with $5.3 billion in the fourth quarter of 2015. Net
earnings were $751 million, or
$1.84 per diluted share, compared
with $730 million, or $1.71 per share, a year ago.
Net earnings in the fourth quarter of 2016 included pretax net
realized investment gains of $116
million, or $.29 per diluted
share, compared with net pretax gains of $91
million, or $.22 per diluted
share, a year ago. Pretax net realized gains from securities
transactions and impairments for the fourth quarter amounted to
$114 million, or $.28 per diluted share, and were composed of
pretax realized investment gains from securities transactions of
$128 million, or $.32 per diluted share, and pretax realized
investment losses from impairments of $14
million, or $.04 per diluted
share. Amortized hedge costs related to certain dollar investments
of Aflac Japan on a pretax basis were $62
million in the quarter, or $.15 per diluted share. Realized pretax net
investment gains from other derivative and hedging activities in
the quarter were $64 million, or
$.16 per diluted share. In
addition, net earnings included a pretax gain of $70 million, or $.17 per diluted share, from other and
nonrecurring items. This $70 million
primarily resulted from a foreign currency gain associated with
investment activities during the quarter and a loss on the early
extinguishment of debt previously disclosed. Income tax on
non-operating items in the quarter was $65
million. Beginning in the fourth quarter of 2016, the
company adopted an amortized method of accounting for hedge
costs.
The following discussion includes references to Aflac's
performance measures, operating earnings and operating earnings per
diluted share. These measures are not calculated in accordance with
U.S. GAAP. The measures exclude items that the company believes may
obscure the underlying fundamentals and trends in insurance
operations because they tend to be driven by general economic
conditions and events or related to infrequent activities not
directly associated with insurance operations. Management uses
operating earnings and operating earnings per diluted share to
evaluate the financial performance of Aflac's insurance operations
on a consolidated basis and believes that a presentation of these
measures is vitally important to an understanding of the underlying
profitability drivers and trends of Aflac's insurance business.
Aflac defines operating earnings (a non-U.S. GAAP financial
measure) as the profits derived from operations. Operating earnings
includes interest cash flows associated with notes payable but
excludes items that cannot be predicted or that are outside of
management's control, such as realized investment gains and losses
from securities transactions, impairments, and derivative and
hedging activities; nonrecurring items; and other non-operating
income (loss) from net earnings. 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 for certain notes payable and forecasted cash flows
denominated in yen. Operating earnings per share (basic or
dilutive) are the operating earnings for the period divided by the
average outstanding shares (basic or dilutive) for the period
presented.
Due to the size of Aflac Japan, where the functional currency is
the Japanese yen, fluctuations in the yen/dollar exchange rate can
have a significant effect on reported results. In periods when the
yen weakens, translating yen into dollars results in fewer dollars
being reported. When the yen strengthens, translating yen into
dollars results in more dollars being reported. Consequently, yen
weakening has the effect of suppressing current period results in
relation to the comparable prior period, while yen strengthening
has the effect of magnifying current period results in relation to
the comparable prior period. As a result, the company views foreign
currency translation as a financial reporting issue for Aflac
rather than an economic event to the company or shareholders.
Because a significant portion of the company's business is
conducted in Japan and foreign
exchange rates are outside of management's control, Aflac believes
it is important to understand the impact of translating Japanese
yen into U.S. dollars. Operating earnings and operating earnings
per diluted shares "excluding current period foreign currency
impact" are computed using the average yen/dollar exchange rate for
the comparable prior year period, which eliminates dollar based
fluctuations driven solely from currency rate changes.
The average yen/dollar exchange rate in the fourth quarter of
2016 was 109.10, or 11.4% stronger than the average rate of 121.54
in the fourth quarter of 2015. For the full year, the average
exchange rate was 108.70, or 11.3% stronger than the rate of 120.99
a year ago. Aflac Japan's growth rates in dollar terms for the
fourth quarter and the full year were magnified as a result of the
stronger yen/dollar exchange rate.
Operating earnings in the fourth quarter were $630 million, compared with $668 million in the fourth quarter of 2015,
reflecting the impact of a pretax $52
million (¥6 billion) reserve adjustment on a closed block of
business. Operating earnings per diluted share decreased 1.3% to
$1.54 in the quarter, reflecting the
reserve adjustment of $.08 per
diluted share, compared with $1.56 a
year ago. The stronger yen/dollar exchange rate increased operating
earnings per diluted share by $.08
for the fourth quarter. Excluding the impact from the stronger yen,
operating earnings per diluted share decreased 6.4%.
Results for the full year of 2016 were also magnified by the
stronger yen. Total revenues were up 8.1% to $22.6 billion, compared with $20.9 billion for the full year of 2015. Net
earnings for the full year of 2016 were $2.7
billion, or $6.42 per diluted
share, compared with $2.5 billion, or
$5.85 per diluted share, a year ago.
Operating earnings for the full year of 2016 were $2.8 billion, or $6.79 per diluted share, compared with
$2.7 billion, or $6.16 per diluted share, in 2015. Excluding the
positive impact of $.34 per share
from the stronger yen, operating earnings per diluted share
increased 4.7% to $6.45 per share for
the full year of 2016 and in line with previous guidance.
Total investments and cash at the end of December 2016 were $116.4
billion, compared with $128.9
billion at September 30,
2016.
In the fourth quarter, Aflac repurchased $200 million, or 2.8 million of its common
shares. For the full year, the company purchased $1.4 billion, or 21.6 million shares. At the end
of December, the company had 26.8 million shares available for
purchase under its share repurchase authorizations.
Shareholders' equity was $20.5
billion, or $50.47 per share,
at December 31, 2016, compared with
$22.8 billion, or $55.84 per share, at September 30, 2016. Shareholders' equity at the
end of the fourth quarter included a net unrealized gain on
investment securities and derivatives of $4.8 billion, compared with a net unrealized gain
of $6.1 billion at the end of
September 2016. The annualized return
on average shareholders' equity in the fourth quarter was 13.9%. 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 15.6% for the
fourth quarter, or 13.7%, excluding the impact of foreign currency.
For the full year, operating return on average shareholders'
equity, excluding the impact of foreign currency, was 17.3%.
AFLAC JAPAN
In yen terms, Aflac Japan's premium income, net of reinsurance
agreements, increased .2% in the fourth quarter. Net investment
income decreased 7.6%, as the stronger yen/dollar exchange rate
significantly impacted the reported results of Aflac Japan's
dollar-denominated investment income, which accounted for
approximately 47% of Aflac Japan's fourth quarter investment
income. Total revenues were down 1.1% in the fourth quarter.
Reflecting the impact of the ¥6 billion reserve adjustment on a
closed block of business in the fourth quarter, pretax operating
earnings in yen decreased 14.1% on a reported basis and decreased
10.5% on a currency-neutral basis. The pretax operating profit
margin for the Japan segment
decreased to 19.4% from 22.3% in the prior year. For the full year,
premium income in yen increased .8%, and net investment income
declined 5.8%. Total revenues in yen were down .3%, and pretax
operating earnings in yen decreased 5.7%. On a currency-neutral
basis, pretax operating earnings declined 2.0%.
Aflac Japan's growth rates in dollar terms for the fourth
quarter were magnified as a result of the significantly stronger
yen/dollar exchange rate. Premium income increased 11.7% to
$3.4 billion in the fourth quarter.
Net investment income increased 2.8% to $629
million. Total revenues increased 10.2% to $4.0 billion. Pretax operating earnings decreased
4.3% to $775 million. For the full
year, premium income was $13.5
billion, or 12.4% higher than a year ago. Net investment
income increased 4.9% to $2.6
billion. Total revenues were up 11.2% to $16.1 billion. Pretax operating earnings were
$3.3 billion, or 5.0% higher than a
year ago.
In the fourth quarter, total new annualized premium sales
decreased 18.5% to ¥25.8 billion, or $236
million. Third sector sales, which include cancer, medical
and income support products increased 1.6% in the quarter. Total
first sector sales, which include products such as WAYS and child
endowment, decreased 60.2% in the quarter.
For the full year, new annualized premium sales were down 5.9%
to ¥113.7 billion, or $1.0 billion.
Third sector sales increased 4.1% for the full year.
AFLAC U.S.
Aflac U.S. premium income increased 2.2% to $1.4 billion in the fourth quarter. Net
investment income was up 4.0% to $177
million. Total revenues increased 2.6% to $1.5 billion. Reflecting a lower benefit and
expense ratio compared to last year's fourth quarter, the pretax
operating profit margin for the U.S. segment was 17.0%, compared
with 15.8% a year ago. Pretax operating earnings were $262 million, an increase of 10.4% for the
quarter. For the full year, total revenues were up 2.2% to
$6.2 billion and premium income rose
2.0% to $5.5 billion. Net investment
income increased 3.8% to $703
million. Pretax operating earnings were $1.2 billion, 9.7% higher than a year ago. The
pretax profit margin for the full year was 19.6%, compared with
18.3% in 2015.
Aflac U.S. total new annualized premium sales decreased 2.9% in
the quarter to $483 million. For the
full year, total new sales decreased .3% to $1.5 billion.
DIVIDEND
The board of directors declared the first quarter cash dividend.
The first quarter dividend of $.43
per share is payable on March 1,
2017, to shareholders of record at the close of business on
February 15, 2017.
OUTLOOK
Commenting on the company's results, Chairman and Chief
Executive Officer Daniel P. Amos
stated: "We are pleased with the company's overall performance for
the year. Despite the pervasive low-interest-rate environment,
Aflac Japan, our largest earnings contributor, generated solid
financial results. Additionally, our operation in Japan produced strong third sector sales
results throughout 2016. As we said during our outlook call last
month, we continue to believe the long-term compound annual growth
rate for third sector product sales will be in the range of 4% to
6%. Turning to our U.S. operations, we are pleased with the
financial performance and strong profitability of Aflac U.S. in
2016. While we were disappointed with sales results for Aflac U.S.
in 2016, I want to reiterate that we believe the
strategy for growth we adopted in both our career and broker
channels is the right one as we look ahead. As we said on last
month's outlook call, we anticipate a long-term compound annual
growth rate of 3% to 5% in new annualized premium
sales.
"Based on our assessment of the company's capital strength, we
repatriated approximately ¥139 billion in 2016, which is consistent
with our expectation. We remain committed to
maintaining strong capital ratios on behalf of our policyholders.
As we have communicated, absent compelling alternatives, we believe
that growing the cash dividend and repurchasing our shares are the
most attractive means for deploying capital. We anticipate that
we'll repurchase in the range of $1.3 to
$1.5 billion of our shares in 2017, front-end loaded in the
first half of the year. As we indicated last quarter, 2016 marked
the 34th consecutive year in which we've increased the 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.
"As we look to 2017, our guidance remains unchanged since
our December outlook call. Our objective is to produce stable
operating earnings per diluted share of $6.40 to $6.65, assuming the average exchange
rate in 2016 of 108.70 yen to the
dollar. As always, we are working very hard to achieve our
earnings-per-share objective while also ensuring we deliver on our
promise to policyholders."
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. (EST) on Wednesday, February 1, 2017.
AFLAC INCORPORATED
AND SUBSIDIARIES CONDENSED INCOME STATEMENT
|
(UNAUDITED – IN
MILLIONS, EXCEPT FOR SHARE AND PER-SHARE AMOUNTS)
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED
DECEMBER 31,
|
|
2016
|
|
|
2015
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
$
|
5,955
|
|
$
|
5,319
|
|
12.0%
|
|
|
|
|
|
|
|
|
|
|
Benefits and claims,
net
|
|
3,262
|
|
|
2,930
|
|
11.4
|
|
|
|
|
|
|
|
|
|
|
Total acquisition and
operating expenses
|
|
1,540
|
|
|
1,279
|
|
20.3
|
|
|
|
|
|
|
|
|
|
|
Earnings before
income taxes
|
|
1,153
|
|
|
1,110
|
|
4.0
|
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
|
402
|
|
|
380
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
$
|
751
|
|
$
|
730
|
|
3.0%
|
|
|
|
|
|
|
|
|
|
|
Net earnings per
share – basic
|
$
|
1.85
|
|
$
|
1.72
|
|
7.6%
|
|
|
|
|
|
|
|
|
|
|
Net earnings per
share – diluted
|
|
1.84
|
|
|
1.71
|
|
7.6
|
|
|
|
|
|
|
|
|
|
|
Shares used to
compute earnings per share (000):
|
|
|
|
|
|
|
|
|
|
Basic
|
406,847
|
|
425,056
|
|
(4.3)%
|
|
|
Diluted
|
409,380
|
|
427,556
|
|
(4.3)
|
|
|
|
|
|
|
|
|
|
|
Dividends paid per
share
|
$
|
.43
|
|
$
|
.41
|
|
4.9%
|
|
AFLAC INCORPORATED
AND SUBSIDIARIES CONDENSED INCOME STATEMENT
|
(UNAUDITED – IN
MILLIONS, EXCEPT FOR SHARE AND PER-SHARE AMOUNTS)
|
|
|
|
|
|
|
|
|
TWELVE MONTHS
ENDED DECEMBER 31,
|
|
2016
|
|
|
2015
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
$
|
22,559
|
|
$
|
20,872
|
|
8.1%
|
|
|
|
|
|
|
|
|
|
|
Benefits and claims,
net
|
|
12,919
|
|
|
11,746
|
|
10.0
|
|
|
|
|
|
|
|
|
|
|
Total acquisition and
operating expenses
|
|
5,573
|
|
|
5,264
|
|
5.8
|
|
|
|
|
|
|
|
|
|
|
Earnings before
income taxes
|
|
4,067
|
|
|
3,862
|
|
5.3
|
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
|
1,408
|
|
|
1,329
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
$
|
2,659
|
|
$
|
2,533
|
|
5.0%
|
|
|
|
|
|
|
|
|
|
|
Net earnings per
share – basic
|
$
|
6.46
|
|
$
|
5.88
|
|
9.9%
|
|
|
|
|
|
|
|
|
|
|
Net earnings per
share – diluted
|
|
6.42
|
|
|
5.85
|
|
9.7
|
|
|
|
|
|
|
|
|
|
|
Shares used to
compute earnings per share (000):
|
|
|
|
|
|
|
|
|
|
Basic
|
411,471
|
|
430,654
|
|
(4.5)%
|
|
|
Diluted
|
413,921
|
|
433,172
|
|
(4.4)
|
|
|
|
|
|
|
|
|
|
|
Dividends paid per
share
|
$
|
1.66
|
|
$
|
1.58
|
|
5.1%
|
|
|
AFLAC INCORPORATED
AND SUBSIDIARIES CONDENSED BALANCE SHEET
(UNAUDITED – IN
MILLIONS, EXCEPT FOR SHARE AMOUNTS)
|
|
|
|
|
|
|
|
|
DECEMBER
31,
|
|
2016
|
|
|
2015
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total investments and
cash
|
$
|
116,361
|
|
$
|
105,897
|
|
9.9%
|
|
|
|
|
|
|
|
|
|
|
Deferred policy
acquisition costs
|
|
8,993
|
|
|
8,511
|
|
5.7
|
|
|
|
|
|
|
|
|
|
|
Other
assets
|
|
4,465
|
|
|
3,848
|
|
16.0
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
$
|
129,819
|
|
$
|
118,256
|
|
9.8%
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
shareholders' equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Policy
liabilities
|
$
|
93,726
|
|
$
|
87,631
|
|
7.0%
|
|
|
|
|
|
|
|
|
|
|
Notes
payable
|
|
5,360
|
|
|
4,971
|
|
7.8
|
|
|
|
|
|
|
|
|
|
|
Other
liabilities
|
|
10,251
|
|
|
7,946
|
|
29.0
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity
|
|
20,482
|
|
|
17,708
|
|
15.7
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
$
|
129,819
|
|
$
|
118,256
|
|
9.8%
|
|
|
|
|
|
|
|
|
|
|
Shares outstanding at
end of period (000)
|
|
405,810
|
|
|
424,380
|
|
(4.4)%
|
|
|
RECONCILIATION OF
NET EARNINGS TO OPERATING EARNINGS
|
(UNAUDITED – IN
MILLIONS, EXCEPT FOR PER-SHARE AMOUNTS)
|
|
|
|
|
|
|
|
|
THREE MONTHS
ENDED DECEMBER 31,
|
|
2016
|
|
|
2015
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
$
|
751
|
|
$
|
730
|
|
3.0%
|
|
|
|
|
|
|
|
|
|
|
Items impacting net
earnings:
|
|
|
|
|
|
|
|
|
Realized investment
(gains) losses:
|
|
|
|
|
|
|
|
|
Securities transactions and
impairments
|
|
(114)
|
|
|
(107)
|
|
|
|
Impact of
derivative and hedging activities:
|
|
|
|
|
|
|
|
|
Hedge
costs related to
foreign
|
|
|
|
|
|
|
|
|
currency investments1
|
|
62
|
|
|
26
|
|
|
|
Other derivative and hedging
activities1
|
|
(64)
|
|
|
(10)
|
|
|
|
Other and non-recurring (income) loss
|
|
(70)
|
|
|
(4)
|
|
|
|
Income tax (benefit) expense on items
excluded
from operating
earnings
|
|
65
|
|
|
33
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
earnings
|
|
630
|
|
|
668
|
|
(5.6)%
|
|
Current period
foreign currency impact2
|
|
(32)
|
|
|
N/A
|
|
|
|
Operating earnings
excluding current period foreign currency
impact3
|
$
|
598
|
|
$
|
668
|
|
(10.4)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per
diluted share
|
$
|
1.84
|
|
$
|
1.71
|
|
7.6%
|
|
|
|
|
|
|
|
|
|
|
Items impacting net
earnings:
|
|
|
|
|
|
|
|
|
Realized investment (gains)
losses:
|
|
|
|
|
|
|
|
|
Securities transactions and
impairments
|
|
(.28)
|
|
|
(.26)
|
|
|
|
Impact of derivative and hedging activities:
|
|
|
|
|
|
|
|
|
Hedge costs related to
foreign
|
|
|
|
|
|
|
|
|
currency
investments1
|
|
.15
|
|
|
.06
|
|
|
|
Other derivative and hedging
activities1
|
|
(.16)
|
|
|
(.02)
|
|
|
|
Other and
non-recurring (income) loss
|
|
(.17)
|
|
|
(.01)
|
|
|
|
Income tax (benefit) expense on items
excluded
from operating
earnings
|
|
.16
|
|
|
.08
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings
per diluted share
|
|
1.54
|
|
|
1.56
|
|
(1.3)%
|
|
Current period
foreign currency impact2
|
|
(.08)
|
|
|
N/A
|
|
|
|
Operating earnings
per diluted share excluding
current period foreign
currency impact3
|
$
|
1.46
|
|
$
|
1.56
|
|
(6.4)%
|
|
|
|
1 Prior
year amounts have been reclassified to reflect the change in
methodology of calculating the hedge costs related to foreign
currency investments.
|
2 Prior
period foreign currency impact reflected as "N/A" to isolate change
for current period only.
3 Amounts
excluding current period foreign currency impact are computed using
the average yen/dollar exchange rate for the comparable
prior- year period, which
eliminates dollar-based fluctuations driven solely from currency
rate changes.
|
RECONCILIATION OF
NET EARNINGS TO OPERATING EARNINGS
|
(UNAUDITED – IN
MILLIONS, EXCEPT FOR PER-SHARE AMOUNTS)
|
|
|
|
|
|
|
|
|
|
TWELVE MONTHS
ENDED DECEMBER 31,
|
|
2016
|
|
|
2015
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
$
|
2,659
|
|
$
|
2,533
|
|
5.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
Items impacting net
earnings:
|
|
|
|
|
|
|
|
|
|
Realized investment
(gains) losses:
|
|
|
|
|
|
|
|
|
|
Securities transactions and
impairments
|
|
(132)
|
|
|
(150)
|
|
|
|
|
Impact of
derivative and hedging activities:
|
|
|
|
|
|
|
|
|
|
Hedge costs related to
foreign
|
|
|
|
|
|
|
|
|
|
currency investments1
|
|
186
|
|
|
72
|
|
|
|
|
Other derivative and hedging
activities1
|
|
154
|
|
|
23
|
|
|
|
|
Other and non-recurring (income) loss
|
|
28
|
|
|
266
|
|
|
|
|
Income tax (benefit) expense on items
excluded
from operating
earnings
|
|
(83)
|
|
|
(74)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
earnings
|
|
2,812
|
|
|
2,670
|
|
5.3%
|
|
|
Current period
foreign currency impact2
|
|
(141)
|
|
|
N/A
|
|
|
|
|
Operating earnings
excluding current period foreign currency
impact3
|
$
|
2,671
|
|
$
|
2,670
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per
diluted share
|
$
|
6.42
|
|
$
|
5.85
|
|
9.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
Items impacting net
earnings:
|
|
|
|
|
|
|
|
|
|
Realized investment (gains)
losses:
|
|
|
|
|
|
|
|
|
|
Securities transactions and
impairments
|
|
(.32)
|
|
|
(.35)
|
|
|
|
|
Impact of derivative and hedging activities:
|
|
|
|
|
|
|
|
|
|
Hedge costs related to
foreign
|
|
|
|
|
|
|
|
|
|
currency
investments1
|
|
.45
|
|
|
.17
|
|
|
|
|
Other derivative and hedging
activities1
|
|
.37
|
|
|
.05
|
|
|
|
|
Other and
non-recurring (income) loss
|
|
.07
|
|
|
.61
|
|
|
|
|
Income tax (benefit) expense on items
excluded
from operating
earnings
|
|
(.20)
|
|
|
(.17)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings
per diluted share
|
|
6.79
|
|
|
6.16
|
|
10.2%
|
|
|
Current period
foreign currency impact2
|
|
(.34)
|
|
|
N/A
|
|
|
|
|
Operating earnings
per diluted share excluding
current period foreign
currency impact3
|
$
|
6.45
|
|
$
|
6.16
|
|
4.7%
|
|
|
|
|
|
|
1 Prior
year amounts have been reclassified to reflect the change in
methodology of calculating the hedge costs related to foreign
currency investments.
|
|
2 Prior
period foreign currency impact reflected as "N/A" to isolate change
for current period only.
|
|
3 Amounts
excluding current period foreign currency impact are computed using
the average yen/dollar exchange rate for the comparable prior-year
period, which eliminates dollar-based fluctuations driven solely
from currency rate changes.
|
|
EFFECT OF FOREIGN
CURRENCY ON OPERATING RESULTS1
(SELECTED PERCENTAGE
CHANGES, UNAUDITED)
|
|
|
|
THREE MONTHS ENDED
DECEMBER 31, 2016
|
Including
Currency
Changes
|
Excluding
Currency
Changes2
|
|
|
|
Net premium
income3
|
8.7%
|
|
.7%
|
|
|
|
|
|
|
Net investment
income
|
2.7
|
|
(1.6)
|
|
|
|
|
|
|
Total benefits and
expenses
|
10.9
|
|
2.9
|
|
|
|
|
|
|
Operating
earnings
|
(5.6)
|
|
(10.4)
|
|
|
|
|
|
|
Operating earnings
per diluted share
|
(1.3)
|
|
(6.4)
|
|
|
1 Refer to
previously defined operating earnings and operating earnings per
diluted share.
|
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)
|
|
|
|
TWELVE MONTHS
ENDED DECEMBER 31, 2016
|
Including
Currency
Changes
|
Excluding
Currency
Changes2
|
|
|
|
Net premium
income3
|
9.4%
|
|
1.4%
|
|
|
|
|
|
|
Net investment
income
|
4.6
|
|
.2
|
|
|
|
|
|
|
Total benefits and
expenses
|
9.2
|
|
1.2
|
|
|
|
|
|
|
Operating
earnings
|
5.3
|
|
–
|
|
|
|
|
|
|
|
Operating earnings
per diluted share
|
10.2
|
|
4.7
|
|
|
1 Refer to
previously defined operating earnings and operating earnings per
diluted share.
|
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
|
2017 OPERATING
EARNINGS PER SHARE1 SCENARIOS
|
|
Weighted-Average Yen/Dollar
Exchange Rate
|
Operating Earnings
Per
Diluted
Share
|
Foreign
Currency
Impact
|
|
|
|
100
|
$6.73 -
6.98
|
$.33
|
105
|
6.53 -
6.78
|
.13
|
108.70(2)
|
6.40 -
6.65
|
–
|
115
|
6.19 -
6.44
|
(.21)
|
120
|
6.04 -
6.29
|
(.36)
|
|
|
|
1 A
non-GAAP financial measure, operating earnings per share (basic or
dilutive) are the operating earnings for the period divided by the
average outstanding shares (basic or dilutive) for the period
presented in 2017 and 2016.In reliance on the "unreasonable
efforts" exception in Item 10(e)(1)(i)(B) of SEC Regulation
S-K, a quantitative reconciliation to the most comparable GAAP
measure is not provided for this financial
measure. Forward-looking information with regard to the
most comparable GAAP financial measure, earnings per share, is not
available without unreasonable effort. This is due to the
unpredictable and uncontrollable nature of these reconciling items,
which would require an unreasonable effort to forecast and we
believe would result in such a broad range of projected values that
would not be meaningful to investors. For this reason, we believe
that the probable significance of such information is
low.
|
2
Actual 2016 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 report 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", "outlook" 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; exposure to
significant interest rate risk; concentration of business in
Japan; foreign currency fluctuations in the yen/dollar
exchange rate; risks relating to the conversion of the Japan branch to a subsidiary; limited
availability of acceptable yen-denominated investments; deviations
in actual experience from pricing and reserving assumptions;
ability to continue to develop and implement improvements in
information technology systems; governmental actions for the
purpose of stabilizing the financial markets; 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; ongoing changes
in our industry; failure to comply with restrictions on patient
privacy and information security; extensive regulation and changes
in law or regulation by governmental authorities; defaults and
credit downgrades of securities in our investment portfolio;
ability to attract and retain qualified sales associates and
employees; decline in creditworthiness of other financial
institutions; subsidiaries' ability to pay dividends to Aflac
Incorporated; decreases in our financial strength or debt
ratings; inherent limitations to risk management policies and
procedures; concentration of our investments in any particular
single-issuer or sector; differing judgments applied to
investment valuations; ability to effectively manage key executive
succession; significant valuation judgments in determination of
amount of impairments taken on our investments; 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; loss of consumer trust resulting from events
external to our operations; credit and other risks associated with
Aflac's investment in perpetual securities; increased expenses and
reduced profitability resulting from changes in assumptions for
pension and other postretirement benefit plans; level and outcome
of litigation; and failure of internal controls or corporate
governance policies and procedures.
Logo - http://mma.prnewswire.com/media/463356/AFLAC_Logo.jpg
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
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/aflac-incorporated-announces-fourth-quarter-results-reports-2016-net-earnings-of-27-billion-2016-operating-eps-in-line-with-guidance-affirms-2017-outlook-declares-first-quarter-cash-dividend-300399848.html
SOURCE Aflac Incorporated