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Aflac (AFL) Q4 Earnings Beat on Higher Variable Investment Income
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Aflac Incorporated (AFL - Free Report) reported fourth-quarter 2021 adjusted earnings per share of $1.28, which surpassed the Zacks Consensus Estimate by 2.4%. The bottom line improved 19.6% year over year.
AFL’s total revenues of $5.4 billion fell 8.1% year over year. The top line beat the consensus mark by 4.2%.
The better-than-expected fourth-quarter results were driven by improved variable investment income from alternative investments. The uptick in sales across both the Aflac Japan and Aflac U.S. segments coupled with reduced acquisition and operating expenses also contributed to the upside. However, year-over-year decline in revenues hampered AFL’s earnings.
Management remains optimistic about better face-to-face opportunities with customers, which is expected to aid Aflac in generating increased sales in 2022.
Adjusted net investment income declined 5.1% year over year to $893 million in the fourth quarter.
Total acquisition and operating expenses of $1.6 billion slipped 6% year over year.
Aflac Incorporated Price, Consensus and EPS Surprise
Total adjusted revenues of $3.6 billion decreased 8.5% year over year in the segment, mainly due to a 12.1% decline in net earned premiums, partly mitigated by 6.9% growth in adjusted net investment income.
Pretax adjusted earnings of the segment improved 8% year over year to $887 million in the quarter under review. New annualized premium sales amounted to $128 million, which inched up 1.1% year over year on the back of an intermittent recovery in pandemic conditions resulting in a gradual uptick in face-to-face sales activity.
Aflac U.S.
Total adjusted revenues inched up 0.1% year over year to $1.6 billion in the fourth quarter owing to 8.2% growth in adjusted net investment income, partly offset by a 1.3% decline in net earned premiums.
Pretax adjusted earnings of the segment totaled $261 million, which climbed 39.6% year over year. The growth came on the back of lower incurred benefits and improved adjusted net investment income. Aflac U.S. sales of $464 million improved 19.6% year over year in the fourth quarter.
Solid Financial Position (as of Dec 31, 2021)
Total investments and cash of $143 billion fell 4.5% from the 2020-end level.
Total assets declined 4.6% year over year to $157.5 billion.
Shareholders' equity (excluding AOCI) increased 5.3% year over year to $25.9 billion.
Share Repurchase and Dividend Update
In the fourth quarter, Aflac bought back 11.1 million shares worth $625 million.
In November 2021, the board of directors approved a 21.2% hike in the first quarter 2022 dividend. With the announcement, which marked the 39th straight year of a dividend hike, the payout now stands at 40 cents per share payable on Mar 1, 2022 to shareholders of record as of Feb 16.
Full-Year Update
For 2021, Aflac’s revenues dipped 0.2% year over year to $22.1 billion. Full-year adjusted earnings per share of $5.94 improved 19.8% year over year.
Annualized adjusted return on equity, excluding foreign currency impact, was 16.1%, which improved 100 basis points (bps) from the 2020-end level. In 2021, AFL bought back 43.3 million shares worth $2.3 billion.
Of the insurance industry players that have reported fourth-quarter results so far, AXIS Capital Holdings Limited (AXS - Free Report) , RLI Corp. (RLI - Free Report) and The Progressive Corporation (PGR - Free Report) beat the Zacks Consensus Estimate for earnings.
AXIS Capital reported adjusted fourth-quarter 2021 earnings of $2.13 per share, which beat the Zacks Consensus Estimate by 58% and rebounded from the year-ago loss of 20 cents. AXS’ total operating revenues of $1.4 billion outpaced the Zacks Consensus Estimate by 11.2% and rose 15% year over year. Gross premiums written increased 16% year over year to $1.6 billion. The combined ratio of AXIS Capital improved 1650 bps year over year to 93.1.
RLI’s fourth-quarter 2021 operating earnings of $1.26 per share beat the Zacks Consensus Estimate by 35.9% and improved 38% from the prior-year quarter. Operating revenues of RLI for the reported quarter were $275.9 million, up 14.2% year over year but missed the consensus mark by a whisker. Gross premiums written increased 12.2% year over year to $337.2 million. RLI’s combined ratio improved 730 bps year over year to 80.7.
Progressive’s earnings per share of $1.05 beat the Zacks Consensus Estimate of 99 cents but declined 43.2% from the year-ago quarter. Net premiums written of PGR were $10.7 billion in the quarter, up 13% from $9.5 billion a year ago. Progressive’s combined ratio deteriorated by 630 bps from the prior-year quarter to 94.7.
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Aflac (AFL) Q4 Earnings Beat on Higher Variable Investment Income
Aflac Incorporated (AFL - Free Report) reported fourth-quarter 2021 adjusted earnings per share of $1.28, which surpassed the Zacks Consensus Estimate by 2.4%. The bottom line improved 19.6% year over year.
AFL’s total revenues of $5.4 billion fell 8.1% year over year. The top line beat the consensus mark by 4.2%.
The better-than-expected fourth-quarter results were driven by improved variable investment income from alternative investments. The uptick in sales across both the Aflac Japan and Aflac U.S. segments coupled with reduced acquisition and operating expenses also contributed to the upside. However, year-over-year decline in revenues hampered AFL’s earnings.
Management remains optimistic about better face-to-face opportunities with customers, which is expected to aid Aflac in generating increased sales in 2022.
Adjusted net investment income declined 5.1% year over year to $893 million in the fourth quarter.
Total acquisition and operating expenses of $1.6 billion slipped 6% year over year.
Aflac Incorporated Price, Consensus and EPS Surprise
Aflac Incorporated price-consensus-eps-surprise-chart | Aflac Incorporated Quote
Aflac Japan
Total adjusted revenues of $3.6 billion decreased 8.5% year over year in the segment, mainly due to a 12.1% decline in net earned premiums, partly mitigated by 6.9% growth in adjusted net investment income.
Pretax adjusted earnings of the segment improved 8% year over year to $887 million in the quarter under review. New annualized premium sales amounted to $128 million, which inched up 1.1% year over year on the back of an intermittent recovery in pandemic conditions resulting in a gradual uptick in face-to-face sales activity.
Aflac U.S.
Total adjusted revenues inched up 0.1% year over year to $1.6 billion in the fourth quarter owing to 8.2% growth in adjusted net investment income, partly offset by a 1.3% decline in net earned premiums.
Pretax adjusted earnings of the segment totaled $261 million, which climbed 39.6% year over year. The growth came on the back of lower incurred benefits and improved adjusted net investment income. Aflac U.S. sales of $464 million improved 19.6% year over year in the fourth quarter.
Solid Financial Position (as of Dec 31, 2021)
Total investments and cash of $143 billion fell 4.5% from the 2020-end level.
Total assets declined 4.6% year over year to $157.5 billion.
Shareholders' equity (excluding AOCI) increased 5.3% year over year to $25.9 billion.
Share Repurchase and Dividend Update
In the fourth quarter, Aflac bought back 11.1 million shares worth $625 million.
In November 2021, the board of directors approved a 21.2% hike in the first quarter 2022 dividend. With the announcement, which marked the 39th straight year of a dividend hike, the payout now stands at 40 cents per share payable on Mar 1, 2022 to shareholders of record as of Feb 16.
Full-Year Update
For 2021, Aflac’s revenues dipped 0.2% year over year to $22.1 billion. Full-year adjusted earnings per share of $5.94 improved 19.8% year over year.
Annualized adjusted return on equity, excluding foreign currency impact, was 16.1%, which improved 100 basis points (bps) from the 2020-end level. In 2021, AFL bought back 43.3 million shares worth $2.3 billion.
Zacks Rank
Aflac currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Some Other Insurers
Of the insurance industry players that have reported fourth-quarter results so far, AXIS Capital Holdings Limited (AXS - Free Report) , RLI Corp. (RLI - Free Report) and The Progressive Corporation (PGR - Free Report) beat the Zacks Consensus Estimate for earnings.
AXIS Capital reported adjusted fourth-quarter 2021 earnings of $2.13 per share, which beat the Zacks Consensus Estimate by 58% and rebounded from the year-ago loss of 20 cents. AXS’ total operating revenues of $1.4 billion outpaced the Zacks Consensus Estimate by 11.2% and rose 15% year over year. Gross premiums written increased 16% year over year to $1.6 billion. The combined ratio of AXIS Capital improved 1650 bps year over year to 93.1.
RLI’s fourth-quarter 2021 operating earnings of $1.26 per share beat the Zacks Consensus Estimate by 35.9% and improved 38% from the prior-year quarter. Operating revenues of RLI for the reported quarter were $275.9 million, up 14.2% year over year but missed the consensus mark by a whisker. Gross premiums written increased 12.2% year over year to $337.2 million. RLI’s combined ratio improved 730 bps year over year to 80.7.
Progressive’s earnings per share of $1.05 beat the Zacks Consensus Estimate of 99 cents but declined 43.2% from the year-ago quarter. Net premiums written of PGR were $10.7 billion in the quarter, up 13% from $9.5 billion a year ago. Progressive’s combined ratio deteriorated by 630 bps from the prior-year quarter to 94.7.