Financials
Insurance - Life
$55.76B
12.8K
Aflac Incorporated is a supplemental health and life insurance provider, operating primarily in the U.S. and Japan. The company's core business model revolves around offering supplemental insurance products, with a focus on cancer and medical insurance in Japan, and accident, disability, and critical care insurance in the U.S. Aflac's competitive advantages include a well-known brand, a large distribution network, and low-cost operations, particularly in Japan.
Key insights and themes extracted from this filing
Net earnings for the three months ended June 30, 2024 were $1.755 billion, compared to $1.634 billion for the same period in 2023. Net earnings for the six months ended June 30, 2024 were $3.634 billion, compared to $2.822 billion for the same period in 2023.
Total revenues for the three months ended June 30, 2024 were $5.138 billion, compared to $5.172 billion for the same period in 2023. Total revenues for the six months ended June 30, 2024 were $10.575 billion, compared to $9.972 billion for the same period in 2023.
Cash dividends per share for the three months ended June 30, 2024 were $.50, compared to $.42 for the same period in 2023. Cash dividends per share for the six months ended June 30, 2024 were $1.00, compared to $.84 for the same period in 2023.
The increase in new annualized premium sales on a yen basis in the second quarter and first six months of of 2024 was driven primarily by sales of Aflac Japan's new life insurance product, Tsumitasu, that offers an asset formation component and a nursing care option, which was launched in June 2024.
Aflac Japan continues to promote digital and web-based sales to groups and use of its system that enables smart device-based insurance application by allowing the customer and an Aflac Japan operator to see the same screen through their smart devices. Further, Aflac Japan continues to utilize its virtual sales tool that enables online consultations and policy applications to be completed entirely online.
The decrease in the first six months of 2024 reflects continued strong underwriting discipline as the Company focuses on more profitable growth with an emphasis on persistency.
The Company remains committed to prudent liquidity and capital management. At June 30, 2024, the Company held $6.1 billion in cash and cash equivalents for stress conditions, which includes the Parent Company's target minimum amount of $1.8 billion.
Total adjusted expenses decreased primarily due to improved expense efficiency in Aflac U.S. and decreased primarily due to internal reinsurance activity in Aflac Japan.
Total benefits and claims decreased primarily due to internal reinsurance activity in Aflac Japan and total benefits and claims increased primarily due to growth of group life and disability and lower remeasurement gains reflecting actual experience in Aflac U.S.
The average yen/dollar exchange rate for the three-month period ended June 30, 2024 was 155.70, or 11.7% weaker than the average yen/dollar exchange rate of 137.53 for the same period in 2023. The average yen/dollar exchange rate for the six-month period ended June 30, 2024 was 152.30, or 11.4% weaker than the average yen/dollar exchange rate of 134.97 for the same period in 2023.
The Company is exposed to interest rate risk, and the Company's investments are sensitive to changes in interest rates. The Company uses interest rate swaps from time to time to mitigate the risk of investment income volatility for certain variable-rate investments and uses interest rate swaptions to hedge changes in the fair value associated with interest rate fluctuations for certain U.S. dollar-denominated available-for-sale fixed-maturity securities.
The Company is exposed to credit risk, and the Company's investments are sensitive to defaults and credit downgrades. The Company monitors the credit ratings periodically, but not less frequently than quarterly.
The foundation of Aflac Japan's product portfolio has been, and continues to be, third sector products, which include cancer, medical, income support and other products. With continued cost pressure on Japan's health care system, the Company expects the need for third sector products will continue to rise in the future and that the medical and cancer insurance products Aflac Japan provides will continue to be an important part of its product portfolio.
Net earned premiums increased primarily due to higher net earned premiums from growth initiatives including group life and disability and consumer markets businesses and continued improvements in premium persistency.
The decrease in the first six months of 2024 reflects continued strong underwriting discipline as the Company focuses on more profitable growth with an emphasis on persistency.
Total adjusted expenses decreased primarily due to improved expense efficiency in Aflac U.S. and decreased primarily due to internal reinsurance activity in Aflac Japan.
Total benefits and claims decreased primarily due to internal reinsurance activity in Aflac Japan and total benefits and claims increased primarily due to growth of group life and disability and lower remeasurement gains reflecting actual experience in Aflac U.S.
The Company has invested in a variety of commercial mortgage loans (CMLs) and other loans including transitional real estate loans (TREs). The Company’s TRE and CML investments are collateralized by commercial real estate, including some office properties. The Company considers these investments to be well diversified by geography and among property types.
Aflac Japan continues to promote digital and web-based sales to groups and use of its system that enables smart device-based insurance application by allowing the customer and an Aflac Japan operator to see the same screen through their smart devices. Further, Aflac Japan continues to utilize its virtual sales tool that enables online consultations and policy applications to be completed entirely online.
The Company continues to develop and implement improvements in information technology systems and on successful execution of revenue growth and expense management initiatives.
The Company's management believes that the implementation of this system upgrade has improved and enhanced its internal control over financial reporting.
In the first six months of 2024, Aflac Incorporated repurchased $1.6 billion, or 18.6 million of its common shares. At June 30, 2024, the Company had 59.2 million remaining shares authorized for repurchase.
Cash dividends paid to shareholders were $.50 per share in the second quarter of 2024, compared with $.42 per share in the second quarter of 2023.
The Company remains committed to maintaining strong capital levels, consistent with maintaining current insurance financial strength and credit ratings.
The Company remains committed to maintaining strong capital levels, consistent with maintaining current insurance financial strength and credit ratings.
The Company is focused on policyholder protection and has implemented various measures to protect policyholders.
Aflac Japan's SMR remains high and reflects a strong capital and surplus position. The Company is committed to maintaining strong capital levels, consistent with maintaining current insurance financial strength and credit ratings.
The average yen/dollar exchange rate for the three-month period ended June 30, 2024 was 155.70, or 11.7% weaker than the average yen/dollar exchange rate of 137.53 for the same period in 2023. The average yen/dollar exchange rate for the six-month period ended June 30, 2024 was 152.30, or 11.4% weaker than the average yen/dollar exchange rate of 134.97 for the same period in 2023.
The Company is exposed to interest rate risk, and the Company's investments are sensitive to changes in interest rates. The Company uses interest rate swaps from time to time to mitigate the risk of investment income volatility for certain variable-rate investments and uses interest rate swaptions to hedge changes in the fair value associated with interest rate fluctuations for certain U.S. dollar-denominated available-for-sale fixed-maturity securities.
The Company is exposed to credit risk, and the Company's investments are sensitive to defaults and credit downgrades. The Company monitors the credit ratings periodically, but not less frequently than quarterly.