AFLAC Inc. Reports Operating Results (10-Q)
Aflac Inc has a market cap of $21.03 billion; its shares were traded at around $43.46 with a P/E ratio of 7 and P/S ratio of 1. The dividend yield of Aflac Inc stocks is 2.9%. Aflac Inc had an annual average earning growth of 10.5% over the past 10 years. GuruFocus rated Aflac Inc the business predictability rank of 3.5-star.
Highlight of Business Operations:During the three-month period ended March 31, 2012, we realized pretax investment gains, net of losses, of $78 million ($51 million after-tax) from sales and redemptions of securities. These gains primarily resulted from both the redemption of a previously impaired perpetual security and sales related to our implemented plan to reduce the risk exposure in our investment portfolio. We realized pretax investment losses of $203 million ($132 million after-tax) as a result of the recognition of other-than-temporary impairment losses on certain securities. These losses primarily resulted from impairments on two Tier I securities that were sold subsequent to the end of the quarter.
During the three-month period ended March 31, 2011, we realized pretax investment losses of $405 million ($263 million after-tax) as a result of the recognition of other-than-temporary impairment losses on certain securities, and we realized pretax investment losses, net of gains, of $144 million ($94 million after-tax) from sales and redemptions of securities, primarily as a result of an implemented plan to reduce the risk exposure in our investment portfolio coupled with the continued decline in the credit worthiness of certain issuers.
The percentage increases in premium income in yen reflect the growth of premiums in force. Annualized premiums in force increased 8.9% to 1.38 trillion yen as of March 31, 2012, compared with 1.27 trillion yen as of March 31, 2011. The increase in annualized premiums in force in yen reflect the sales of new policies combined with the high persistency of Aflac Japan s business. Annualized premiums in force, translated into dollars at respective period-end exchange rates, were $16.8 billion at March 31, 2012, compared with $15.3 billion a year ago.
Aflac Japan maintains a portfolio of dollar-denominated and reverse-dual currency securities (yen-denominated debt securities with dollar coupon payments). Dollar-denominated investment income from these assets accounted for approximately 35% of Aflac Japan s investment income in the first three months of 2012, compared with 33% a year ago. In periods when the yen strengthens in relation to the dollar, translating Aflac Japan s dollar-denominated investment income into yen lowers growth rates for net investment income, total operating revenues, and pretax operating earnings in yen terms. In periods when the yen weakens, translating dollar-denominated investment income into yen magnifies growth rates for net investment income, total operating revenues, and pretax operating earnings in yen terms. Excluding foreign currency changes from the prior period, dollar-denominated investment income accounted for approximately 36% of Aflac Japan s investment income during the first three months of 2012 and 2011.
Our group products sold through Aflac Group Insurance have enhanced sales opportunities not only for brokers but also for our traditional sales force of individual associates, especially when they pursue larger payroll accounts. For the three-month period ended March 31, 2012, sales from Aflac Group Insurance increased 38.4%, compared with the same period in the prior year, to $50 million, representing 14% of new annualized premium sales for Aflac U.S.
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