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Aflac Incorporated’s (AFL - Free Report) third-quarter 2016 operating earnings per share of $1.82 beat the Zacks Consensus Estimate of $1.74 by about 4.6% and improved 16.7% year over year.
Including one-time items, Aflac’s net income in the reported quarter was $1.53, up 15.9% year over year.
Total revenue grew 13.4% year over year to $5.7 billion. The top-line improvement is attributable to a stronger yen-dollar exchange rate. However, revenues missed the Zacks Consensus Estimate of $5.8 billion.
Total acquisition and operating expenses increased 10.1% year over year to $1.4 billion, while benefits and claims rose 15.4% year over year to $3.4 billion.
Detailed Analysis
Total revenue from Aflac Japan grew 18.7% year over year to $4.3 billion. Premium income increased 20.6% to $3.6 billion during the quarter, while investment income jumped 9.1% to $661 million, both on a year-over-year basis. Pre-tax operating earnings were up 11.7% from the prior-year quarter to $882 million.
Aflac U.S. generated revenues of $1.5 billion, up 1.4% from the prior-year quarter. Net investment income grew 1.7% to $176 million, while premiums inched up 1.4% to $1.5 billion. However, total new annualized premium sales in Aflac U.S. dipped 1.8% to $324 million. Pre-tax operating earnings in the U.S. climbed 12.4% year over year to $323 million.
Financial Update
As of Sep 30, 2016, total investment and cash increased 22.9% year over year to $128.9 billion. Shareholders’ equity was up 32% year over year to $22.9 billion.
Dividend Update
Aflac’s board of directors declared an increase of 4.9% in its fourth-quarter cash dividend. The increased dividend of 43 cents per share is payable on Dec 1, to shareholders on record at the close of business on Nov 16, 2016.
Share Repurchase Update
In the third quarter, the company spent $200 million to buy back 2.7 million common shares. At the end of Sep 2016, the company had 29.6 million shares remaining under its authorization.
Guidance Raised
Aflac raised its 2016 guidance. The company increased its expected operating earnings per share range for 2016 to $6.40–$6.60 from the previous estimation of $6.17–$6.41. The same for the fourth quarter is expected in the range of $1.53–$1.82 per share or a range of $6.78–$7.07 per share on an annualized basis.
For 2016, the company anticipates the new annualized sales growth for Aflac U.S. at the lower end of the 3–5% band.
For Aflac Japan, the company expects long-term CAGR for third-sector sales in the range of 4–6%.
Aflac also intends to repurchase $1.4 billion worth common stock through 2016, with $1.2 billion already bought back during the first nine months.
Among the other players from the insurance industry that have reported their third-quarter earnings so far, the bottom line at Progressive Corp.(PGR - Free Report) , The Travelers Companies Inc. (TRV - Free Report) and XL Group Ltd beat their respective Zacks Consensus Estimates.
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Aflac (AFL) Q3 Earnings Beat, Revenues Miss; View Raised
Aflac Incorporated’s (AFL - Free Report) third-quarter 2016 operating earnings per share of $1.82 beat the Zacks Consensus Estimate of $1.74 by about 4.6% and improved 16.7% year over year.
Including one-time items, Aflac’s net income in the reported quarter was $1.53, up 15.9% year over year.
Total revenue grew 13.4% year over year to $5.7 billion. The top-line improvement is attributable to a stronger yen-dollar exchange rate. However, revenues missed the Zacks Consensus Estimate of $5.8 billion.
Total acquisition and operating expenses increased 10.1% year over year to $1.4 billion, while benefits and claims rose 15.4% year over year to $3.4 billion.
Detailed Analysis
Total revenue from Aflac Japan grew 18.7% year over year to $4.3 billion. Premium income increased 20.6% to $3.6 billion during the quarter, while investment income jumped 9.1% to $661 million, both on a year-over-year basis. Pre-tax operating earnings were up 11.7% from the prior-year quarter to $882 million.
Aflac U.S. generated revenues of $1.5 billion, up 1.4% from the prior-year quarter. Net investment income grew 1.7% to $176 million, while premiums inched up 1.4% to $1.5 billion. However, total new annualized premium sales in Aflac U.S. dipped 1.8% to $324 million. Pre-tax operating earnings in the U.S. climbed 12.4% year over year to $323 million.
Financial Update
As of Sep 30, 2016, total investment and cash increased 22.9% year over year to $128.9 billion. Shareholders’ equity was up 32% year over year to $22.9 billion.
Dividend Update
Aflac’s board of directors declared an increase of 4.9% in its fourth-quarter cash dividend. The increased dividend of 43 cents per share is payable on Dec 1, to shareholders on record at the close of business on Nov 16, 2016.
Share Repurchase Update
In the third quarter, the company spent $200 million to buy back 2.7 million common shares. At the end of Sep 2016, the company had 29.6 million shares remaining under its authorization.
Guidance Raised
Aflac raised its 2016 guidance. The company increased its expected operating earnings per share range for 2016 to $6.40–$6.60 from the previous estimation of $6.17–$6.41. The same for the fourth quarter is expected in the range of $1.53–$1.82 per share or a range of $6.78–$7.07 per share on an annualized basis.
For 2016, the company anticipates the new annualized sales growth for Aflac U.S. at the lower end of the 3–5% band.
For Aflac Japan, the company expects long-term CAGR for third-sector sales in the range of 4–6%.
Aflac also intends to repurchase $1.4 billion worth common stock through 2016, with $1.2 billion already bought back during the first nine months.
AFLAC INC Price, Consensus and EPS Surprise
AFLAC INC Price, Consensus and EPS Surprise | AFLAC INC Quote
Zacks Rank
Currently, Aflac holds a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
Performance of Other Insurers
Among the other players from the insurance industry that have reported their third-quarter earnings so far, the bottom line at Progressive Corp.(PGR - Free Report) , The Travelers Companies Inc. (TRV - Free Report) and XL Group Ltd beat their respective Zacks Consensus Estimates.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>