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Aflac (AFL) Q2 Earnings Surpass Estimates, Revenues Miss
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Aflac Inc.’s (AFL - Free Report) second-quarter 2018 earnings of $1.07 per share surpassed the Zacks Consensus Estimate by 9.2% and increased 15.2% year over year. Results buoyed up on overall favorable pretax margins and a lower effective tax rate as a result of tax reform.
A stronger yen/dollar exchange rate aided earnings per share by 1 cent in the second quarter.
Total revenues for the second quarter increased 3.7% year over year to $5.6 billion but missed the Zacks Consensus Estimate by 1.86%.
Aflac Incorporated Price, Consensus and EPS Surprise
Total revenues increased 1.5% year over year to $3.8 billion, led by an 8.8% rise in net investment income and a 0.2% rise in premium income. Pretax operating earnings increased 5.7% to $836 million.
In Japan, third sector (cancer and medical) sales were up 16% in yen terms, driven by the successful launch of new cancer insurance products in April. Aflac U.S.
Total revenues increased 2.5% year over year to $1.6 billion, led by a 2.7% increase in premium income to $1.4 billion and 0.6% higher annualized premium sales. Net investment income increased 1.1% to $182 million driven by higher income from floating rate assets, partially offset by the drawdown of excess capital in the U.S. segment.
Pretax operating earnings for the U.S. segment was $340 million, up 3% year over year.
Share Repurchase Update
In the second quarter of 2018, the company purchased 6.8 million shares worth $306 million.
At the end of June, the company had 84.6 million shares available for purchase under its share repurchase authorization.
Solid Financial Position
Total investments and cash as of Jun 30, 2018 were $127.9 billion, up 4.9% year over year.
At the end of the second quarter of 2018, total assets were $144.98 billion, up 4.9% year over year.
Shareholders' equity was $23.8 billion, as of Jun 30, 2018, up 10.7% year over year.
2018 Guidance
The company revised up its earnings per share to $3.90-$4.06 from the previous guidance range of $3.72, and $3.88 assuming the average 2017 exchange rate of 112.16 yen to the dollar. It also guided thirdd-quarter earnings in the range of 87 cents to $1.02 per share, if the yen averages 110 to 115 to the dollar.
For 2018, the company anticipates that in its Japan business, third sector earned premium will continue its steady growth in the 2% to 3% range, reflecting Aflac's stable sales and high persistency.
Coming to its U.S. segment, for the full year, Aflac anticipates growth in earned premium within 2% to 3% and new annualized premium sales growth within 3% to 5%, with production skewed toward the fourth quarter.
Among the other players from the insurance industry that have reported second-quarter earnings so far, the bottom line of The Progressive Corporation (PGR - Free Report) , MGIC Investment Corporation (MTG - Free Report) and RLI Corp. (RLI - Free Report) beat the respective Zacks Consensus Estimate.
5 Medical Stocks to Buy Now
Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia, and other conditions.
New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.
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Aflac (AFL) Q2 Earnings Surpass Estimates, Revenues Miss
Aflac Inc.’s (AFL - Free Report) second-quarter 2018 earnings of $1.07 per share surpassed the Zacks Consensus Estimate by 9.2% and increased 15.2% year over year. Results buoyed up on overall favorable pretax margins and a lower effective tax rate as a result of tax reform.
A stronger yen/dollar exchange rate aided earnings per share by 1 cent in the second quarter.
Total revenues for the second quarter increased 3.7% year over year to $5.6 billion but missed the Zacks Consensus Estimate by 1.86%.
Aflac Incorporated Price, Consensus and EPS Surprise
Aflac Incorporated Price, Consensus and EPS Surprise | Aflac Incorporated Quote
Strong Quarterly Segment Results
Aflac Japan
Total revenues increased 1.5% year over year to $3.8 billion, led by an 8.8% rise in net investment income and a 0.2% rise in premium income. Pretax operating earnings increased 5.7% to $836 million.
In Japan, third sector (cancer and medical) sales were up 16% in yen terms, driven by the successful launch of new cancer insurance products in April.
Aflac U.S.
Total revenues increased 2.5% year over year to $1.6 billion, led by a 2.7% increase in premium income to $1.4 billion and 0.6% higher annualized premium sales. Net investment income increased 1.1% to $182 million driven by higher income from floating rate assets, partially offset by the drawdown of excess capital in the U.S. segment.
Pretax operating earnings for the U.S. segment was $340 million, up 3% year over year.
Share Repurchase Update
In the second quarter of 2018, the company purchased 6.8 million shares worth $306 million.
At the end of June, the company had 84.6 million shares available for purchase under its share repurchase authorization.
Solid Financial Position
Total investments and cash as of Jun 30, 2018 were $127.9 billion, up 4.9% year over year.
At the end of the second quarter of 2018, total assets were $144.98 billion, up 4.9% year over year.
Shareholders' equity was $23.8 billion, as of Jun 30, 2018, up 10.7% year over year.
2018 Guidance
The company revised up its earnings per share to $3.90-$4.06 from the previous guidance range of $3.72, and $3.88 assuming the average 2017 exchange rate of 112.16 yen to the dollar. It also guided thirdd-quarter earnings in the range of 87 cents to $1.02 per share, if the yen averages 110 to 115 to the dollar.
For 2018, the company anticipates that in its Japan business, third sector earned premium will continue its steady growth in the 2% to 3% range, reflecting Aflac's stable sales and high persistency.
Coming to its U.S. segment, for the full year, Aflac anticipates growth in earned premium within 2% to 3% and new annualized premium sales growth within 3% to 5%, with production skewed toward the fourth quarter.
Zacks Rank & Stocks to Consider
Aflac has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Performance of Other Insurers
Among the other players from the insurance industry that have reported second-quarter earnings so far, the bottom line of The Progressive Corporation (PGR - Free Report) , MGIC Investment Corporation (MTG - Free Report) and RLI Corp. (RLI - Free Report) beat the respective Zacks Consensus Estimate.
5 Medical Stocks to Buy Now
Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia, and other conditions.
New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.
Click here to see the 5 stocks >>