Aflac Incorporated (AFL) on Q1 2021 Results - Earnings Call Transcript

Operator: Welcome to the Aflac 2021 First Quarter Earnings Conference Call. . I would now like to turn the call over to Mr. David Young, Vice President of Aflac Investor and Rating Agency Relations. David Young: Thank you, Parsha, and good morning and welcome to Aflac Incorporated first quarter earnings call. As always, we have posted our earnings release and financial supplement to investors.aflac.com. This morning we will be hearing remarks about the quarter related to our operations in Japan and the United States amid the ongoing COVID-19 pandemic. Daniel Amos: Thank you, David. Good morning and thank you for joining us. At our first quarter conference call one year ago we were facing the early days of the pandemic, at that time I shared with you actions that we had taken to ensure that we protect the employees, the distribution partners, the policy holders and the communities. I'm proud of our response and our ability to handle these challenging times for everyone. Our people first embodies the spirit of corporate culture which we refer to as the Aflac way. Within the pandemic environment we are encouraged by the production of the distribution of the COVID-19 vaccines but we also recognize that vaccination efforts are still in the early stages around the world. Our thoughts and prayers are with everyone affected and we are cautiously optimistic while also remaining diligent. Frederick Crawford: Thank you, Dan. I'm going to touch briefly on current pandemic conditions in Japan and the U.S., then focus my comments on efforts to restore our production platform in 2021. Japan has experienced approximately 575,000 COVID cases and 10,000 confirmed deaths since inception of the virus. Through the first quarter of 2021 and since the inception of the virus, Aflac Japan's COVID impact has totaled approximately 10,500 claimants, with incurred claims of JPY 1.9 billion. We continue to experience a low level of paid claims for medical conditions other than COVID, as policyholders refrain from routine hospital visits. . There are essentially 3 areas of focus in building back to prepandemic levels of production in Japan: Our traditional product refreshment activities, online sales driving productivity in the face of pandemic conditions, and active engagement with Japan Post to begin the recovery process in cancer insurance sales. As Dan noted, there has been a positive reception to our revised medical product. This product was designed to better compete in the independent agent channel, where we had seen a decline in market share heading into 2020. Sales of medical insurance are up 34% over the first quarter of 2020 and up 8% over the 2019 quarter. The new product, called Ever Prime, has enhanced benefits that, on average, result in 5% to 10% more premiums per policy versus our old medical product. The product also includes a low claims bonus structure that has contributed to growth among younger demographics. We have technology in place to allow agents to pivot from face-to-face to virtual sales and an entirely digital customer experience. The agent is not removed from the process. The agent can make the sale and process the policy from point of solicitation to point of issuance, entirely online without face-to-face contact. Max Broden: Thank you, Fred. Let me follow my comments with a review of our Q1 performance with a focus on how our core capital and earnings drivers have developed. For the first quarter, adjusted earnings per share increased 26.4% to $1.53, with a $0.02 positive impact from FX in the quarter. This strong performance for the quarter was largely driven by lower utilization during the pandemic, especially in the U.S. and a lower tax rate compared to last year. Variable investment income $24.5 million above our long-term return expectations. Adjusted book value per share, including foreign currency translation gains and losses, grew 20.6%, and the adjusted ROE, excluding the foreign currency impact, was a strong 16.7%, a significant spread to our cost of capital. Starting with our Japan segment. Total earned premium for the quarter declined 3.6%, reflecting per policies paid up impact while earned premium for our third sector product was down 2.2% as sales were under pressure in 2020. Japan's total benefit ratio came in at 68.4% for the quarter, down 100 basis points year-over-year, and the third sector benefit ratio was down -- was 58%, also down 100 basis points year-over-year. We experienced slightly higher than normal IBNR release in our third sector block as experience continues to come in favorable relative to initial. This quarter, it was primarily due to pandemic conditions constraining utilization. Persistency remains strong, with a rate of 95%, up 50 basis points year-over-year. Our expense ratio in Japan was 21.3%, up 130 basis points year-over-year. With improved sales activity, expenses naturally pick up in our technology-related investments into converting Aflac Japan to a paperless company continues, which also includes higher system maintenance expenses. Adjusted net investment income increased 6.9% in yen terms, primarily driven by favorable returns on our growing private equity portfolio and lower hedge costs, partially offset by lower reinvestment yield on our fixed and floating rate portfolio. The pretax margin for Japan in the quarter was 23.1%, up 60 basis points year-over-year. A very good start to the year. Turning to the U.S. Net earned premium was down 4.1% due to weaker sales results. Persistency improved 240 basis points to 80%, as our efforts to retain accounts and reduce lapsation show early positive results. As Fred noted, there are still 9 states with premium grace periods in place. So we are monitoring these developments closely. Breaking down the 240 basis points persistency rate improvement further. 70 basis points can be explained by the emergency orders in place, 90 basis points by lower sales as first year lapse rates are roughly twice total in-force lapse rates. And the residual of 80 basis points includes conservation efforts executed on last year. Our total benefit ratio came in much lower than expected. At 39.1%, a full 900 basis points lower than Q1 2020. In the quarter, we experienced lower paid claims, especially in the month of January. As pandemic conditions impacted behavior of our policyholders. This is in line with disclosures in 2020, indicating a negative correlation between infection levels and claims generating activities like accidents, elective surgeries and physical exams. This low activity level related to non-COVID claims accounted for most of the year-over-year drop in the benefit ratio. Our total incurred COVID-related claims also came in lower than expected due to an IBNR release. We estimated new COVID claims at approximately $42 million, and this was offset by an IBNR release of $41 million. As our experience accumulates, we have refined our assumptions, and this led to this IBNR reserve release. We expect the benefit ratio to increase gradually throughout the remainder of the year, with the resumption of normal activity in our communities and by our policyholders.. For the full year, we now expect our benefit ratio to be towards the lower end or slightly below our guided range of 48% to 51%. Our expense ratio in the U.S. was 38.5%, up 10 basis points year-over-year, but with a lot of moving parts. Weaker sales performance negatively impacts revenue, however, the impact to our expense ratio is largely offset by lower DAC expense. Higher advertising spend increased the expense ratio by 70 basis points along with our continued build-out of growth initiatives, group life and disability, network and direct-to-consumer. These contributed to a 110 basis point increase to the ratio. The strategic growth initiative investments are largely offset by our efforts to lower core operating expenses as we strive towards being the low-cost producer in the voluntary benefit space. Net-net, despite a lot of moving parts, Q1 expenses are tracking according to plan. In the quarter, we also incurred $6 million of integration expenses not included in adjusted earnings associated with recent acquisitions. Adjusted net investment income in the U.S. was down 0.6% due to a 22 basis points contraction in the portfolio yield year-over-year, partially offset by favorable variable investment income. Profitability in the U.S. segment was very strong, with a pretax margin of 27.3%, with a low benefit ratio as the core driver. With Q1 now in the books, we are increasing our pretax margin expectation for the full year. Initial expectations were for us to be towards the low end of 16% to 19%. We now expect to end up for the full year towards the high end of this range indicated at. In our corporate segment, we recorded a pretax loss of $26 million as adjusted net investment income was $20 million lower than last year, due to lower interest rates at the short end of the yield curve. Other adjusted expenses were $7 million lower as our cost reduction activities are coming through. Our capital position remains strong, and we ended the quarter with an SMR north of 900% in Japan and an RBC of approximately 563% in Aflac Columbus. Unencumbered holding company liquidity stood at $3.9 billion, $1.5 billion above our minimum balance, excluding the $400 million proceeds from the sustainability bond that we issued in March that reinforced our ESG initiatives and believe that sustainable investments are also good long-term investments. Leverage, which includes the sustainability bond, increased but remains at a comfortable 23% in the middle of our leverage corridor of 20% to 25%. In the quarter, we repurchased $650 million of our own stock and paid dividends of $227 million, offering good relative IRR on these capital deployments. We will continue to be flexible and tactical in how we manage the balance sheet and deploy capital in order to drive strong risk-adjusted ROE with a meaningful spread to our cost of capital. And with that, I'll hand it over to David to begin Q&A. David Young: Thank you, Max. Now we are ready to take your questions. . Pasha, we will now take the first question. Operator: . Your first question is from the line of Nigel Dally with Morgan Stanley. Nigel Dally: So Max, perhaps we can start on capital management. Capital ratios look very strong. Cash balances, obviously very high. Concerns regarding credit are dissipating. In the quarter, you bought back more stock than expected given that, could we perhaps see some upside to your capital management plans? Or should we view the outside in buybacks this quarter as being a little more tactical in the decision to front-end your annual plans? Max Broden: So Nigel, obviously, as we travel through the pandemic, we're now moving into more, I would call, normal economic conditions in environment, i.e., less impacted over time by the pandemic. That means that obviously, we gain confidence in how we can deploy capital, and you saw that in the quarter. At the same time, we're not fully out of this yet. And we will continue to look at the -- all the different deployment opportunities that we have. In the quarter, $650 million was a step-up from what we've seen previously, and that reflects our confidence in what we see the franchise driving and coming through over time. And going forward, we will continue to make sure that we hold capital in the right places around the company and deploy capital at favorable IRRs. Nigel Dally: Great. And just a follow-up on premium persistency as well. In the space where the premium waivers have been lifted. Do you tend to see a spike in lapses? Any color there would be would be interesting. I just wanted to try to get an understanding as to whether there's perhaps a challenge for the remaining states that are yet to lift the executive orders? Frederick Crawford: Nigel, it's Fred. You do tend to see a bit of a spike in lapse rates when the state orders subside. And we have actually a fairly good amount of historical experience on this, as I might have mentioned in past comments. It's not unusual to have these state mandates put in place during natural disasters and the like. And so we've seen this before. What I would tell you, however, is when it comes to our financials, we try to account for a level of this in the form of do premium allowance, if you will, meaning the idea of what is an uncollectible amount of premium that may be out there embedded in the book of business that are being suspended, if you will, related to the grace periods. So we try to take into account such that when you do see these state mandates lifted, there's not a pronounced impact, if you will, or measurable impact to our actual financials, even though you may see lapse rates move around. Operator: Your next question is from the line of Humphrey Lee with Dowling & Partners. Humphrey Lee : I guess my first question is on the U.S. underwriting. So Max, in your prepared remarks, you talked about lower claims incidents in January. Do you -- can you share in terms of like how the number claims submitted in January or in the first quarter in general compared to kind of the second and third quarter of last year? Max Broden: So I can give you one example. So in the month of January, we had paid claims drop about 28% in the U.S. compared to prepandemic conditions. That's a very significant drop. We saw a significant normalization from that level in the month of February and further normalization in the month of March. This, to a large extent, explains the low benefit ratio in the quarter. Unidentified Company Representative: And you have to think that one of the reasons for it. And of course, no one knows for sure. But if you think back, we had just had the holidays, and we were seeing on the TV constantly by the government, be careful, don't go out, protect yourselves. We're going to have a spike and I think that brought in the lower numbers. Max Broden: And one thing I would like to add, Humphrey, as well, as we look forward, is that there are certain of our products, you could see an increase in claims being filed as people go back for their physicals, go back for elective surgeries. Even in the line of cancer, we could see a step-up in terms of claims being filed in the future that did not occur during the pandemic. That's why we view the period that we just have been through as abnormal. Humphrey Lee: Yes. I guess, like the -- I understand people getting reminded during January, but at the same time, I feel like was state kind of opening up in the first quarter compared to where we were in the second or third quarter that the entire country was pretty much fully locked down. I guess I was just a little surprised to see the first quarter results being so much better than second or third quarter when we're kind of deep in the pandemic. So... Unidentified Company Representative: I think we were, too. I mean, we certainly would have given you closer projections, had we thought that was the case. So we were certainly surprised for January. But I think what Max is also saying is February and March, we're on target. Max Broden: Our actuaries also remind us constantly that there is a little bit of a lagging environment, and that is there's a bit of a timing gap, as you can imagine, between the actual incident taking place, i.e., going to the doctor and then the filing of the claim. And so you can see some lagging. So we watch the trends and try to embed that in our forecasting as well. Humphrey Lee: So there wasn't any kind of IBNR reserves for non-cover claims that you both in previous quarter that given the projected incidents never materialized that you had a release. So it's not like that, just simply pure from an incidence perspective? Max Broden: Yes, there was an element of that coming through as well. That moved our benefit ratio by about 1.5 points down. Operator: Your next question is from the line of Jimmy Bhullar with JPMorgan Securities. Jimmy Bhullar: I had a question on just your sales in the U.S. and Japan through the quarter. And if you saw a noticeable improvement in March versus what was happening in January? And then relatedly, in Japan, what do you think of the impact of the lockdowns as well as the Olympics coming up and could that affect your sales negatively in late 2Q, early 3Q? Daniel Amos: Well, I'll start and then turn it over to Japan. But in my talk, I said that we saw improvement with January -- February numbers were better than January, and March numbers were better than February, and we expect the second quarter to be better than the first quarter. And that was true in both countries. So from that standpoint, so let me let or whoever he would like to speak talk specifically about your questions. Koji Ariyoshi: Yes. This is from Japan. First of all, let me start out with the current situation in Japan, followed by the sales and our business in Japan as well. Well, first of all, as Fred mentioned earlier, the number of infections in Japan is 575,000, and the number of deaths in total is about 10,000. So compared to other countries, this number is much smaller. And this is -- the reason why we have been able to control much of the infection is because of the nature of our citizens that we normally wear masks, and we care very much about our hygiene. And on top of that, instead of taking the risk, people are really worrying about eating and dining outside, and the restaurants are reducing their business hours, and these things have been very effective. However, even still then, there has been a number of increase of the new infections in Osaka and Tokyo. And as a result, there is a third declaration of emergency, which was issued on April 25. However, the third emergency declaration in Japan is not a lockdown. It is much more focused measure. And for example, the state of emergency declaration that was issued this time only covers four prefectures, and the period that it covers is up to May 11. So compared with the past state of emergency declarations, it's very much limited in terms of time and location. However, the government is imposing much stronger restrictions on restaurants and shopping -- large shopping centers that they are asked to shut down their response and shops for the time being. And the vaccination started in April, starting from the elderly population. And since older population accounts for about 30% of the overall population, we are expecting that this will have a positive effect. However, the situation of the pandemic is very fluid. Therefore, we really need to watch out for the variance and the vaccination status going forward as well. And because of the situation and since the COVID-19 infection is still rising it is very difficult to mention how it is going to be going forward in terms of our projection. But as you can see, as a result of -- in our results of the first quarter, even under the state of emergency declaration, we have been able to promote our medical insurance, and it's been and also because of the extent of the use of online proposals and applications, we haven't been able to mark the same level of performance as this last year. And even from the second quarter and on, we would like to maintain this positive benefit or positive effect from the medical insurance, and we will also be further expanding the use of online proposals and applications. And on top of that, we would also like to be expanding the enrollment through online for group as well. And furthermore, we would also like to be using direct mails, which will enhance the non face-to-face solicitation. And by doing so, we should be we should be minimizing the impact from COVID-19. And that's all for me. Max Broden: One thing I would add that's interesting, just to give you some color on the relative nature of the state of emergency. We sell product through what we would call retail shops, about a little over 20 of those shops are actually owned by Aflac and about 380 of those shops are through affiliate ownership, and we'll do about JPY 6 billion a year in a normal year of production through those shops. During the peak of the emergency orders in the pandemic in April of 2020, essentially all 400 of those locations were shut. Today, under the state of emergency issued around the Tokyo and Osaka and Kobe area, 13 of those shops are closed. And so it gives you a little bit of a perspective on the difference between the early days of the pandemic and more severe approach to emergency orders and the current period that's trying to balance productivity and businesses remaining open, while at the same time, exercising caution. Jimmy Bhullar: Okay. Any comments on how the Olympics would impact? Max Broden: I'm sorry, Jimmy. Can you ask again? Jimmy Bhullar: Yes. I was just on like on the Olympics, is there going to be an impact on sales from the Olympics, do you think? Or should that not be much of a factor? Max Broden: Go ahead. Koji Ariyoshi: This is Koji. We do not think there will be any impact. Max Broden: Yes. That's essentially what I was going to say is we have not factored in any impact, and so we are not expecting. Teresa White: I think the second part of that question was from the U.S. perspective. And I'll just mention this, as we see increase in vaccinations in arms and state mandates being lifted we are now starting to see the markets open up. We've also opened up our market offices, sales offices around the U.S. as well. So we're starting to see a lot more activity from a sales perspective. Virgil, did you have anything else you wanted to add to that? Virgil Miller: No, I'll just reemphasize, Teresa, that as Dan stated and stated earlier, we did see the sequential improvement month-over-month with all sales is really driven by activity of opening up the markets in the offices, along with ensuring that we're continuing to drive our average weaker producers do mine. Teresa White: That's it from the U.S. side. Operator: Your next question is from the line of Tom Gallagher with Evercore. Tom Gallagher: Just wanted to follow-up on the U.S. just to get a handle on what you're thinking about earned premium. I guess, particularly the commentary about the small businesses still being in recovery mode, large employers, focusing on returning employees to work rather than modifying benefits. I guess that commentary sounded a bit cautious to me, but how are you thinking about those issues impacting your sales as -- and overall earned premium? It doesn't sound like you're adjusting your 3-year guidance for earned premium of flattish? Is it changing the trajectory of what you expect for '21 versus '22? Just a little more elaboration on those issues? Max Broden: Will -- go ahead. Well, shorter answer is it's not we -- meaning, we have not adjusted our guidance or even really the path of that guidance, while down for the reasons we've talked about, most notably just simply sales being down. It is actually essentially on plan, meaning it is meeting our expectations and what we thought would take place, Tom. So we're not adjusting any of our thoughts for the roll forward. Unidentified Company Representative: Because persistency is 80% doing better than we thought. Max Broden: Yes, it is doing better. And -- but I would say, overall, it's coming in just as we thought might happen. Tom Gallagher: Okay. And then just a follow-up on the benefit ratio. Max, can you give a sense for when you talk about very favorable in January and then gradually elevating, was March back up to around 48%, 49%? Or was it still below that? And is this still the possibility that 2Q is going to trend favorably based on the trend you saw in March? Max Broden: The total benefits ratio is obviously heavily impacted by quarter end actuarial review studies. But I would say there's just tracking sort of paid claims. We were getting closer to a normal level in the month of March, still not all the way up to what I would say to be prepandemic levels, but we're getting fairly close. Tom Gallagher: Okay. So slightly favorable, but much closer to that level. Max Broden: And that is factored into when we then look at our full year benefit ratio, as we sit here today, and we look out for our benefit ratio we obviously incorporate a whole host of different factors when we look at the full year, including the possibility of some pent-up demand in terms of claims being filed as well. I touched earlier on that, including a potential increase in cancer claims. That's factored into our revised guidance of being towards the low end or slightly below the 48% to 51% for the benefit ratio for the full year in the U.S. Operator: Your next question is from the line of John Barnidge with Piper Seller. John Barnidge: The last time Japan closed proactively selling cancer insurance, the world looked a whole lot different. Can you talk about digital tools? I mean you talked about the new medical product and digital tools that help the distribution there. But can you talk a little bit about the digital tools you're working to bring to Japan post as they work to ramp up proactively starting the product, please? Koji Ariyoshi: Currently, digital tools are into both medical insurance and health insurance. The younger generation uses more than digital tools, it is being very much used by your people. Regarding the, we are preparing them to start using the digital tools. And we already have a plan to get started with the test marketing in some part of the JV. And the really has an intention that wanting to emphasize using the digital tool. So I'm sure that they will be fully leveraging the digital tools going forward. And that's it for me. Max Broden: Yes. Even though -- what's interesting is even though sales were somewhat suspended in the system during this period of recovery for Japan post, the alliance never stopped. And that's important to understand. And so other areas of the alliance, including investing in the distribution platform, investing in mutual technology, certain investment in venture-related strategies. The entire governance structure and regular meetings with executive management and with frontline management, none of that was suspended. It kept moving forward. And much of it was designed around advancing technology and advancing process improvement between the two parties, taking advantage of this pause in the action to be ready to come back into market. Operator: Our next question is from the line of Michael Ward with UBS. Michael Ward: I just had a quick question on the idea of delayed cancer screens. I know you've kind of touched on incidents or frequency but I was wondering if you had any updated expectations on the trend in cancer severity once the economy reopens? Just on the idea that delayed screenings are delaying the detection or worsening cancer conditions. And I thought maybe if you had some historical experience managing premium grace periods from natural disasters, maybe you've kind of seen this happen before. Max Broden: I don't think that we have really gone through such a prolonged time, something like COVID and the type that has had. We saw in the very beginning of COVID that cancer screenings dropped significantly. That then started to normalize. So it's still sort of difficult to fully sort of see or have a clear expectation of it, what the impacts may or may not be. We are trying to be conservative in the estimates that we have and our expectations for what the different outcomes could be in general. I would also remind you that generally, severity does have a little bit of an impact on our claims, but it's relatively small. We're -- primarily frequencies really what drives our benefit ratio. Operator: Your next question is from the line of Ryan Krueger with KBW. Ryan Krueger: I had a follow-up on the Japan post. Can you just give any -- I know it's early and there's a lot of uncertainty, but can you give any sense of, at least directionally, how meaningful you think their sales could be this year? And maybe how many years it might take for them to rebuild back to prior levels? Daniel Amos: Yes. I think it's too early for us to tell. But what I would, Fred mentioned this, but I want to reinforce it, is we've got as good a relationship with the new management team as we had, if not better, with the old management team and being large shareholders that they are. They're also very interested and their stock and what they've invested in. And so it's a win-win opportunity. And I think it will be coming back but when you -- we're in uncharted waters with all of this COVID stuff. And so it's hard for us to go out when we don't know about it as well. But look, this is not in any projections, but my gut just tells me, and it's just mind. So for what it's worth, but that it's going to do very well, and it's going to be a little slow in the second quarter. And then they're going to ramp it up. The one thing I've seen with the Japanese over the years is they tend to analyze, reanalyze, reanalyze again and then all of a sudden move at once. So you don't -- in the U.S., we kind of ease into it, add a little more, add a little more and then it builds. If you take both groups at the starting line, the U.S. will always take off first. But at some point, halfway through that, Japan will all of a sudden decide, we're ready to go. And they will boil out and then all of a sudden go to that point. I believe we're in that stage right now. I believe that will go through the first quarter. But I think by the end of the year, you're going to see them coming back and pulling out. Aflac Japan is a little bit more reluctant than to say all of that. So I am not speaking on their behalf, but I've been doing this for 31 years. And I just have a real good feeling that also Japan post wants to make money, and they need to do those things. And Aflac's products with cancer insurance are something that consumer wants and needs. So when you add that to it, I would say there's a good chance. Now the downside is, something goes wrong with the -- with COVID or something like that. But that's not limited to us. That happens every business out there today. So I'm sure you take that into account. But if you exclude that, I feel pretty good about what's going to be taking place. Operator: Your final question comes from the line of Gregory Peters with Raymond James. Unidentified Analyst: This is Alex on calling in on behalf of Greg Peters. Maybe just one question on the Japan paperless initiative. Just curious if the adoption of digital has any acceleration of that initiative? And as well as are there any other social and environmental initiatives that you're pursuing related to the $400 million bond? Max Broden: I think in terms of the Japan paperless initiative, it's on track. It's moving well. As you might recall, it's a JPY 10 billion, roughly 2.5-year investment. And I would say we're probably in the range of JPY 3 billion, perhaps approaching JPY 4 billion of investment to date. It's designed to take about 80 million pieces of paper out of the system. And it's largely oriented around our policyholder services platform, where when the application starts in a paper form, it remains in a paper form through the processing environment. And so we're looking to get that out of the system, and that benefits cost structure. It benefits business recovery because you can move information around the country of Japan, which can be prone to natural disaster, as you know, and so -- and then also finally has environmental benefits, of course. And so that's a big initiative. We expect to save about JPY 3 billion a year in the way of expenses, and it remains on track, and it is closely tied to the digitization of the platform. It's essentially one and the same. It's one of the major efforts, if you will, that's involved in overall digitization of the platform. In terms of the $400 million sustainability bond, yes, we have very well-articulated and dedicated plans for the investment of those funds. They largely surround classic sustainability investments, meaning climate, climate-related renewable energy investments. They also include, among other things, investments in opportunity zones in areas that suffer from a lack of income equality. And so those are largely the areas that we're targeting. And as you may know, in the sustainability bond, so-called green bond, et cetera, marketplace. There's very strict and well-defined requirements around what you invest in, the qualification of those investments, the tracking of those investments and the yielding of benefits from those investments. And so while it's a $400 million bond, my point in my comments was it's a much bigger effort for the company because it serves to set the entire structure up for broader-based investment, far greater than $400 million over time, particularly the utilization of our general account on ESG efforts. Unidentified Company Representative: And we would expect to earn favorable risk-adjusted returns on these investments. Daniel Amos: Thank you, and I believe that wraps up our call. I want to thank everyone for joining us. Today, if you have any follow-up questions, please feel free to reach out to the investor and rating agency Relations teams, and I look forward to seeing you soon, hopefully, and also talking to you in the near future. Thank you.
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Aflac Incorporated (NYSE:AFL) Stock Analysis: Insights and Expectations

  • Aflac Incorporated (NYSE:AFL) maintains short-term price target stability at $101.5, despite a cautious outlook from Morgan Stanley with a lower target of $78.
  • The company is expected to face a 6.6% decline in EPS and a 13.7% drop in revenue for the upcoming quarter, indicating potential financial challenges ahead.
  • Investors are advised to watch for Aflac's upcoming earnings report and any strategic company announcements that could impact future analyst expectations and stock performance.

Aflac Incorporated (NYSE:AFL) is a leading provider of supplemental health and life insurance products, with operations primarily in Japan and the United States. Founded in 1955 and headquartered in Columbus, Georgia, Aflac offers a variety of insurance products, including cancer, medical, and life insurance. The company competes with other insurers like Lemonade, Heritage Insurance Holdings, and Assurant.

The current consensus price target for Aflac's stock is not explicitly provided, but historical data shows stability in the short term. Last month's and last quarter's average price targets were both $101.5, indicating that analysts' expectations for Aflac have not changed significantly in the short term. However, Morgan Stanley has set a lower price target of $78, suggesting a more cautious outlook.

Over the past year, Aflac's average price target has decreased from $104.5 to $101.5, reflecting a slight decline in analysts' expectations. This decline may be influenced by anticipated financial challenges, as Aflac is expected to report a 6.6% decline in earnings per share (EPS) and a 13.7% drop in revenue for the upcoming second-quarter earnings report. These pressures are present in both the U.S. and Japan markets.

The stability in short-term price targets suggests that analysts have a consistent view of Aflac's near-term performance. However, the anticipated decline in earnings and revenue, as highlighted by Morgan Stanley, may impact analysts' future outlook. Investors should monitor upcoming earnings reports and market conditions in the insurance industry to better understand potential movements in Aflac's stock price.

Investors should also be aware of any company announcements, strategic initiatives, or changes in leadership that could influence analysts' price targets. As Aflac prepares for its second-quarter earnings report, stakeholders are keenly observing these developments to gauge the company's financial health and future prospects.

Aflac Incorporated (NYSE:AFL) Earnings Preview: A Closer Look at the Insurance Giant's Financial Health

  • Aflac Incorporated's NYSE:AFL earnings per share (EPS) is expected to be $1.71, marking a 6.6% decline year-over-year.
  • Revenue is projected at around $4.43 billion, a 13.7% decrease from the previous year, with challenges in both the U.S. and Japan markets.
  • The company's financial metrics, including a price-to-earnings (P/E) ratio of approximately 14.87 and a debt-to-equity ratio of about 0.29, highlight its market position and investor valuation.

Aflac Incorporated (NYSE:AFL) is a prominent player in the insurance industry, known for its supplemental insurance products. As the company gears up to release its quarterly earnings on August 5, 2025, analysts have set their sights on an earnings per share (EPS) of $1.71. This figure represents a 6.6% decline from the previous year, reflecting challenges in both the U.S. and Japan markets.

The company's revenue is projected to be around $4.43 billion, marking a 13.7% year-over-year decrease. This decline is attributed to pressures on earnings and weaker investment income. Despite these challenges, Aflac's Corporate and other segments may offer some relief by improving pre-tax adjusted earnings. However, the anticipated premium growth might be offset by the difficulties faced in Japan.

Over the past month, the consensus EPS estimate has been revised upward by 0.6%, suggesting a slight increase in analyst expectations. This revision trend is often linked to potential investor actions, as changes in earnings estimates can influence short-term stock price performance. Aflac's stock price could be significantly impacted by the upcoming earnings report, especially if the actual earnings differ from expectations.

Aflac's financial metrics provide insight into its current market position. The company has a price-to-earnings (P/E) ratio of approximately 14.87, indicating how much investors are willing to pay for each dollar of earnings. Its price-to-sales ratio is about 3.10, while the enterprise value to sales ratio stands at 3.25. These figures help investors assess the company's valuation relative to its sales and earnings.

The company's debt-to-equity ratio is approximately 0.29, suggesting a relatively low level of debt compared to its equity. This can be a positive sign for investors, as it indicates a lower risk of financial distress. Additionally, Aflac's earnings yield is about 6.72%, providing a measure of the return on investment for shareholders. As the earnings release approaches, these financial metrics will be closely watched by investors and analysts alike.

Aflac Incorporated Downgraded by Evercore ISI but Continues Strong Financial Performance

  • Evercore ISI downgraded Aflac Incorporated (NYSE:AFL) to "Underperform" despite a strong financial strategy and a history of dividend growth.
  • Aflac announced a 16% increase in its first-quarter 2025 dividend, marking the 42nd consecutive year of dividend growth.
  • The company's stock price experienced a slight decrease, but Aflac's commitment to shareholder value and strategic capital deployment highlights its focus on long-term growth.

On December 3, 2024, Evercore ISI downgraded Aflac Incorporated (NYSE:AFL) to "Underperform" with a "hold" action, when the stock was priced at $114.6. Aflac, a leading provider of supplemental insurance in the U.S. and Japan, competes with companies like MetLife and Prudential Financial. Despite the downgrade, Aflac's financial strategies remain strong.

Aflac recently announced a 16% increase in its first-quarter 2025 dividend, raising it to $0.58 per share. This marks the 42nd consecutive year of dividend growth, showcasing Aflac's commitment to enhancing shareholder value. The increased dividend will be paid on March 3, 2025, to shareholders recorded by February 19, 2025, as highlighted by StreetInsider.

The dividend increase reflects Aflac's strong financial position. In the first nine months of 2024, Aflac distributed $820 million in dividends, demonstrating its reliability as a dividend-paying company. The new dividend offers a yield of 1.8% based on the closing stock price of $111.40 on December 2, 2024.

Aflac's stock price currently stands at $106.76, a decrease of 4.17% from the previous day. The stock has traded between $106.74 and $112.24 today, with a market capitalization of approximately $59.31 billion. Despite the recent downgrade, Aflac's strategic capital deployment, including share buybacks, indicates a focus on long-term growth.

Aflac Incorporated Downgraded by Evercore ISI but Continues Strong Financial Performance

  • Evercore ISI downgraded Aflac Incorporated (NYSE:AFL) to "Underperform" despite a strong financial strategy and a history of dividend growth.
  • Aflac announced a 16% increase in its first-quarter 2025 dividend, marking the 42nd consecutive year of dividend growth.
  • The company's stock price experienced a slight decrease, but Aflac's commitment to shareholder value and strategic capital deployment highlights its focus on long-term growth.

On December 3, 2024, Evercore ISI downgraded Aflac Incorporated (NYSE:AFL) to "Underperform" with a "hold" action, when the stock was priced at $114.6. Aflac, a leading provider of supplemental insurance in the U.S. and Japan, competes with companies like MetLife and Prudential Financial. Despite the downgrade, Aflac's financial strategies remain strong.

Aflac recently announced a 16% increase in its first-quarter 2025 dividend, raising it to $0.58 per share. This marks the 42nd consecutive year of dividend growth, showcasing Aflac's commitment to enhancing shareholder value. The increased dividend will be paid on March 3, 2025, to shareholders recorded by February 19, 2025, as highlighted by StreetInsider.

The dividend increase reflects Aflac's strong financial position. In the first nine months of 2024, Aflac distributed $820 million in dividends, demonstrating its reliability as a dividend-paying company. The new dividend offers a yield of 1.8% based on the closing stock price of $111.40 on December 2, 2024.

Aflac's stock price currently stands at $106.76, a decrease of 4.17% from the previous day. The stock has traded between $106.74 and $112.24 today, with a market capitalization of approximately $59.31 billion. Despite the recent downgrade, Aflac's strategic capital deployment, including share buybacks, indicates a focus on long-term growth.