Aflac Incorporated (AFL) on Q2 2021 Results - Earnings Call Transcript

Operator: Welcome to the Aflac Incorporated 2021 Second Quarter Earnings Conference Call. Your lines have been placed on listen-only until the question-and-answer session. Please be advised today’s conference is being recorded. David Young: Thank you, Andrea. Good morning, and welcome to Aflac Incorporated second 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. Dan Amos, Chairman and CEO of Aflac Incorporated, will begin with an overview of our operations in Japan and the U.S.; Fred Crawford, President and COO of Aflac Incorporated, will then touch briefly on conditions in the quarter and discuss key initiatives, including how we are navigating the pandemic; Max Broden, Executive Vice President and CFO of Aflac Incorporated, will conclude our prepared remarks with a summary of second quarter financial results and current capital on liquidity. Members of our U.S. Executive Management team joining us for the Q&A segment of the call are Teresa White, President of Aflac U.S.; Virgil Miller, President of Individual and Group Benefits; Eric Kirsch, Global Chief Investment Officer and President of Aflac Global Investments; Al Riggieri, Global Chief Risk Officer and Chief Actuary; June Howard, Chief Accounting Officer; and Steve Beaver, CFO of Aflac U.S. We are also joined by members of our Executive Management team in Tokyo at Aflac Life Insurance Japan; Charles Lake, Chairman and Representative Director, President of Aflac International; Masatoshi Koide, President and Representative Director; Todd Daniels, Director and CFO and Koichiro Yoshizumi, Director, Deputy President and Director Sales and Marketing. Before we begin, some statements in this teleconference are forward-looking within the meaning of federal securities laws. Although, we believe these statements are reasonable, we can give no assurance that they will prove to be accurate, because they are prospective in nature. Actual results could differ materially from those we discussed today. We encourage you to look at our Annual Report on Form 10-K for some of the various risk factors that could materially impact our results. As I mentioned earlier, the earnings release is available on investors.aflac.com and includes reconciliations of certain non-U.S. GAAP measures. I’ll now hand the call over to Dan. Dan? Daniel Amos: Thanks, David, and good morning, and thank you for joining us. With the pandemic conditions to evolve, we remain cautiously optimistic and vigilant as the vaccination efforts continued in the face of uncertainty associated with the emerging variants. I am proud of our response over the last year and our ability to adapt to what has been a very challenging time for everyone, and I continue to pray each day for everyone affected. Frederick Crawford: Thank you, Dan. I'm going to focus my comments on activities to restore our production platform and progress on growth strategies. Beginning with Aflac Japan, we are focused on three areas in building back to pre-pandemic levels of production, product development, online or digital assistant sales and specific sales efforts within the Japan Post platform. With respect to product development, we continue to see positive reception to our revised medical product EVER Prime. Medical product sales for the first half of the year are up roughly 48% over the same period in 2020 and have approached pre-pandemic levels down only 4% from the 2019 period. We are gaining back market share in this highly competitive medical market. Earlier this year, we launched our first short-term insurance product under a newly formed subsidiary called SUDACHI. The product is a small amount, substandard medical product targeting customers who do not qualify for traditional medical coverage. In the second quarter, we have registered close to 600 agencies with SUDACHI and issued about 230 policies. We are in the very early stages of this initiative, but over time, we anticipate adding additional short-term health and income support products. We are in the process of developing a new care product aimed at supplemental elderly care coverage provided by the government of Japan. We will provide strategic context and timing around this product in the coming months, but we believe this product line will mature into a meaningful driver of future third sector sales with an aging population and in anticipation of a continued shift in financial burden from the government to individuals. Turning to distribution. We have technology in place to allow agents to pivot from face-to-face to virtual sales. On March 26, we launched a national advertising campaign promoting this capability. In the second quarter, we have processed over 14,000 online applications as compared to nearly 8,000 in the first quarter. On Japan Post, proposal activity has increased month-to-month, as sales training and promotion permeates the 20,000 branches that sell our insurance. Through the month of June, Aflac Japan has conducted over 35,000 training sessions with Japan Post sales agents nationwide, along with providing contact information on nearly 700,000 existing cancer policyholders to inform on the latest coverage advantages. Activities in the third quarter included visits with regional office managers in the JP system and post office visits to reinforce the sales process. Max Broden: Thank you, Fred. Let me begin my comments with a review of our Q2 performance with a focus on our core capital and earnings drivers have developed. For the second quarter, adjusted earnings per share increased 24.2% to $1.59. The slightly weaker yen/dollar exchange rate did not have a significant impact on adjusted earnings per diluted share. This strong performance for the quarter was largely driven by lower claims utilization due to the pandemic, especially in the U.S. In addition, variable investment income went $112 million above our long-term return expectations. Adjusted book value per share, including foreign currency translation gains and losses, grew 20.5%, and the adjusted ROE, excluding the foreign currency impact, was a strong 17%, which is a significant spread to our cost of capital. Starting with our Japan segment. Total earned premium for the quarter declined 3.8%, reflecting the impact of first sector policies reaching paid up status, while earned premium for our third sector products was down 2.3% due to recent lower sales volumes. Japan's total benefit ratio came in at 66.9% for the quarter, down 290 basis points year-over-year, and the third sector benefit ratio was 56.5%, down 305 basis points year-over-year. We experienced a slightly higher than normal IBNR release in our third sector block as experience continues to come in favorable relative to initial reserving. This quarter, the IBNR release was primarily due to pandemic conditions constraining utilization since second quarter of 2020 and year-to-date. Although claims activity have begun to rebound, it remains below longer term normalized levels. Our claim reporting lags require up to a year to mature the data, and now with more than a year's worth of pandemic data, our estimates are more refined, which has led to increased IBNR releases. Persistency was down 10 basis points, yet remains strong at 94.7%. Our adjusted expense ratio in Japan was 20.8%, up 80 basis points year-over-year. We continue our technology-related investments to convert Aflac Japan to a paperless company, which also includes higher system maintenance expenses. Additional telework expenses also added to the higher expense ratio in the quarter. Adjusted net investment income increased 27.4% in yen terms, primarily driven by favorable returns on our growing alternatives portfolio and lower hedge costs, partially offset by lower reinvestment yield on our fixed rate portfolio. The pretax margin for Japan in the quarter was 26.5%, up 450 basis points year-over-year, which was a very favorable result for the quarter. This quarters strong financial results leads us to expect the full-year benefit ratio for Japan to be at the lower end of the three-year guidance range of 68.5% to 71% given at FAB and the pretax margin to be at the higher end of the 20.5% to 22.5% range. Turning to U.S. results. Net earned premium was down 3.4% due to weaker sales results. Persistency improved 180 basis points to 80.1%, 63 basis points of the elevated persistency in both the second quarter of this year and the prior year can be explained by emergency orders. So there was no net impact for the quarter year-over-year. 80 basis points of improved persistency in the quarter is attributed to lower sales as first year lapse rates are roughly twice total in-force lapse rates. Another 30 basis points of improved persistency is due to conservation efforts and the remainder largely comes from improved experience. Our total benefit ratio came in lower than expected at 43.5% or 80 basis points lower than Q2 2020, which itself was heavily impacted by the initial pandemic. Lower claims utilization impact our estimates for incurred claims as data matures over the course of a year. As our data matures, we increase our reliance on raw data and with a year of pandemic data behind us, we reduced our IBNR to reflect the lower utilization. This quarter, IBNR releases amounted to 5.6 percentage points impact on the benefit ratio, which leaves an underlying benefit ratio, excluding IBNR releases of 49.1%. 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 in the range of 45% to 48% versus our original guidance of 48% to 51%. Our expense ratio in the U.S. was 36.9%, up 160 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 offset by lower DAC and commission expense. Higher advertising spend increased the expense ratio by 60 basis points. Our continued build-out of growth initiatives, group life and disability, network, dental and vision and direct-to-consumer, contributed to a 170 basis point increase to the ratio. These strategic growth 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, Q2 expenses are tracking according to plan. In the quarter, we also incurred $5.5 million of integration and transition expenses not included in adjusted earnings associated with recent acquisitions. Adjusted net investment income in the U.S. was up 9.9%, mainly driven by favorable variable investment income in the quarter. Profitability in the U.S. segment was very strong, with a pretax margin of 25.4%, with a low benefit ratio as the core driver. With the first half 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 slightly above the range indicated at FAB. In our Corporate segment, we recorded a pretax loss of $76 million as adjusted net investment income was $45 million lower than last year, due to lower interest rates at the short end of the yield curve and amortization of certain tax credit investments, which amounted to $30 million this quarter held at the corporate level. Under U.S. GAAP, we recognized a negative impact to corporate NII, this is offset by a lower effective tax rate for the enterprise. This result in a level of reported volatility to our Corporate segment, but the economic returns on these investments are above our cost of equity capital. To-date, these investments are performing well and in line with expectations. Our capital position remains strong, and we ended the quarter with an SMR about 900% in Japan and an RBC of approximately 600% in Aflac Columbus. Unencumbered holding company liquidity stood at $4.4 billion, which was $2 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 our sustainability bond remains at a comfortable 22.8% in the middle of our leverage corridor of 20% to 25%. In the quarter, we repurchased $500 million of our own stock and paid dividends of $223 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 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. But first, let me ask you to please limit yourself to one initial question and a related follow-up to allow other participants an opportunity to ask a question. Andrea, we will take our first question, please. Operator: We will now begin the question-and-answer session. The first question comes from Nigel Dally of Morgan Stanley. Please go ahead. Nigel Dally: Thanks. Good morning. So I wanted to ask about sales, how they trended throughout the quarter. In the first quarter, they improved every month. February was better than January, March was better than February. So interested in how they trended in the second quarter, both in the U.S. and Japan. Teresa White: Well, the U.S. Virgil, do you want to speak to the sales trend? Virgil Miller: Yes. Nigel, this is Virgil Miller. Let me share with you about our sales trends we've seen in the second quarter. First, you heard from Fred say that we are very pleased to install in our group side of the business, we trended positive and favorably once again. We're trending right now about 117% of 2019, looking strong. We're looking good with our buy-to-build platforms. We expected to hit our goals for the end of the year. And then I'll turn to our individual block of the business was really driven by our career channel. We ran into some headwinds, as you can see, with career recruits. Overall, recruiting looks strong though. We surpassed our Q1 numbers with our Q2. We're looking strong with our veteran recruits. One of the things I look at daily is our veterans getting back to business. In Q1, 73%, we were in 2019 level with our veteran average week of producers. In the second quarter, we were at 78%, so showing a favorable increase there, and we're looking for that to increase throughout the second half of the year and have a strong third and fourth quarter. So overall, I would say we're performing just right at plan when it comes to what we're expecting, a little bit behind with the credit channel but exceeding with the group channel. Daniel Amos: Now, maybe turn to Japan to answer Nigel's question. Masatoshi Koide: Yes. Masatoshi Koide, Aflac Japan. I will have Mr. Yoshizumi answer that question. But before asking him to answer the question, let me introduce to you who Mr. Yoshizumi is. Mr. Yoshizumi has assumed the position of the Head of Sales and Marketing of Aflac Japan succeeding Mr. Ariyoshi effective July 1. Mr. Yoshizumi has more than 30 years of experience in the life insurance sales. And before joining Aflac in January this year, he had led the Sales Division in Manulife Japan, and then took on the position of the CEO of Manulife Japan. We are very extremely pleased to welcome Mr. Yoshizumi to Aflac Japan Sales and Marketing Division Head, as he has very rich leadership experience as well as very extensive experience in sales in Japanese life insurance industry. Koichiro Yoshizumi: Thank you for the introduction. Really great to talk to you all in the U.S. My name is Yoshizumi. And as Mr. Koide just introduced, I have been appointed to lead the Sales and Marketing Division of Aflac Japan, effective July 1. And before I joined the Aflac, I was the CEO of Manulife Japan. However, most of my experience has been – or the 30 years of my experience has been sales promotion and marketing of life insurance. But the types of channels that I've experienced in sales are captive agents channel, independent agents channel, financial institutions, so all sales distribution channels that exist in Japan have been my experience. And I'm very honored to be able to have this wonderful opportunity to be able to discuss Aflac Japan’s sales with you going forward. And once again, great to be here with you. So now let me start to talk about Aflac Japan’s sales results in the first and the second quarter. And under the current COVID situation, let me first of all touch upon on the new medical product that we launched. This was also discussed earlier. And as discussed, we have achieved 48.1% increase year-on-year. And also under this COVID situation, the online application has become a very popular and become a common means for application. As a result, we have enabled to have very active moves and active activities under the current environment. And that's what was covered by Dan. As he said, we are at about 65% of where we were in 2019. And that's it for me. Nigel Dally: That's great. Just a follow-up on Japan Post as well, given that they've begun to actively proactive – they've begun proactive sales, any early indications as to how the sales are coming in relative to your expectations? I know you expected to pay some improvement to be gradual but any early color there? Daniel Amos: At this particular point, it's too early. But again, I wan to reiterate what I said in the first quarter call. Our relationship has never been better with Japan Post. Actually the thing they're dealing with is adjusting from a corrective matters that they took into account due to sales that the new regime has been addressing to now being proactively getting back to the way they were writing business that was properly done. And so it's taking a little bit longer. But all-in-all, as we said in our reports, outlook for both the United States and Japan to see stronger growth in the second half, assuming there isn't some event that takes place with this variant that we're not aware of, but if that happens, everybody is affected with that. So I feel good that you're going to see continued growth more so probably in the fourth quarter than the third. But we don't even know that for sure at this point, but I'm encouraged. Nigel Dally: That's very helpful. Thank you. Operator: The next question comes from Jimmy Bhullar of JMP Securities. Please go ahead. Jamminder Bhullar: Hi, good morning. So first, just had a question on sales as well. And I guess this is built in the U.S. and in Japan. Has the increase that we've seen in cases recently in both markets, and then also in the U.S., we've heard of some companies push back the return to work, have those things affected your views on your sales trends in the second half of the year? Daniel Amos: Go ahead, Teresa. Teresa White: We'll start with the U.S. First, I’ll ask Virgil to respond. Virgil Miller: Yes. We learned throughout the COVID time that large case market specifically around where we sell our group products, that they're more used to it and dealing with brokers used to, we were called self-enrollments and virtual enrollments and online engagements, we really haven't seen much impact there at all. Again, with smaller companies in a small market, really driven by our career channel, we faced some headwinds, like I said earlier around recruiting some of the small businesses not really going face-to-face for 100% of the time. We anticipated that. Rolled our virtual toolsets last year. We're able to – as Dan said in his speech, pretty much serve the customer any way possible. We can do it virtually. We can do it online, or we can meet face-to-face. Now I will tell you this though, I have yet to see that any of our setup enrollments have been changed from a face-to-face yet, we're monitoring that very closely, but right now, we're still able to get face-to-face enrollments, we have them set up. Jamminder Bhullar: And then in Japan… Masatoshi Koide: Thank you for the question. Now this is from Japan. So let me answer your question regarding Japan. In Japan, although we have been limiting the number of people, our employees to come onsite under the state of emergency, sales activities are continuing. And the state of emergency declaration in Japan is different from the lockdown situation in the U.S. And the purpose of the state of emergency declaration in Japan is to really control the people's movement from one place to another. As a result, there is really not that much impact to our sales activities during daytime. And the current state of emergency declaration is imposed to just Tokyo and Okinawa. And so, as we do try to prevent being affected, the activities are being done with full prevention nationwide. And the areas outside of the state of emergency declaration are able to do the normal course of sales. And on top of that, we have online consultation and applications that have spread nationwide and these measures have taken root under this kind of environment. We do believe that we can be quite successful in our sales activities. Jamminder Bhullar: Okay. And if I could just follow-up on recruiting in the U.S., you had pretty strong results this quarter, mostly because of the broker market. On the career side, how was the labor market affecting your ability to sort of recruit and retain agents? And is it getting harder? Not so hard because the services sector seems like it is coming back over all. Daniel Amos: Can you take that Virgil? Virgil Miller: It's certainly getting harder. And you can see, we came out strong, coming out of Q4, going into Q1 our pipeline. Now remember, recruiting new agents, we really got to go through a full process, giving them license, having them basically take an exam and certifying them to understand Aflac products, and we were very strong with our pipeline in Q1. We've seen that pipeline begin to slacken slightly in Q2. Again, as we said earlier, though, this is why we made a conscious decision to really recruit brokers, now why brokers, brokers already come to the table with license. They're already familiar with all products. We just really used to get activated in the second half of the year. Daniel Amos: This is Dan. The one thing I would add is, is that I think the U.S. is doing a very good job of bringing back some of the agents who have been licensed with us have renewals and basically because of COVID have just kind of stopped producing, they've got contests going on with them, they're coming back, they're the soul of the company, and we need to bring them back. And I think we'll be doing that. And I think Virgil is doing a good job with Teresa in terms of pushing that. And Fred has been very instrumental in it too. So I'm thinking that we'll continue to come back, which will reflect in the production. Now, the new recruits, as Virgil mentioned, is harder simply because the labor market, as you can imagine, if you're having trouble with people coming to work based on salary, it's even more difficult with commissions, but all in all, we've got a lot of licensed people out there that we just need to get back. And of course, as you have in higher employment, that gives us an opportunity to enroll people at the work site. So we believe the potential is there and certainly we should see it. Jamminder Bhullar: Okay. Thank you. Operator: The next question comes from Humphrey Lee of Dowling & Partners. Please go ahead. Humphrey Lee: Good morning and thank you for taking the questions. I want to focus a little more on the claims experience this quarter and kind of how to think about it. Can you just talk about, like, what is the overall level of IBNR reserves that you have not just for COVID, but just the overall piece? Like how big were kind of IBNR reserves in Japan and the U.S. at the end of this quarter compared to maybe a pre-pandemic level, say like, 2Q 2019 or year-end 2019? Max Broden: Thank you, Humphrey. This is Max. We don't go into exact the total IBNR levels that we hold. But I would say that, generally speaking, throughout the quarter, we did experience a below expected paid claims. In the first quarter, we had increased month-over-month paid claims that came through. Going into the second quarter, that trend more or less fall, and in April, May and June, we sort of leveled out at a level below what we normally would expect to see, and that to some extent together with more raw data used as input into our IBNR models and led to the reserve releases that we saw in this quarter. Going forward, we obviously reserve to the – our best expectation of future claims results. Humphrey Lee: I guess, maybe just kind of qualitatively, are you still holding more IBNR reserves right now compared to a pre-pandemic level? Max Broden: No, we have not changed our reserving practices. Humphrey Lee: Okay. I guess my follow-up was going to kind of stay on that topic. In terms of the lower paid claims, is there any sense that you can help us to think about the actual paid claims in Japan and the U.S.? Where they were in the second quarter versus maybe during the pandemic and how do they compare to like a pre-pandemic level of normal paid claim activities? Max Broden: Paid claims activity continues to be below our long-term expectations by policy. And the activity is constrained by in economies. So given the products that we are selling, the coverage that we are providing to our policyholders is protecting them from different kinds of life events and also, accidents as an example, and with less people out and about to drive and getting into car accidents, less people playing sports getting into sports accidents that drives both lower claims utilization on the accident line or policies, but also in terms of our hospital indemnity product. So I would say that our claims activity is very much driven by mobility or people. Humphrey Lee: But is there any sense like so, like in sale – when you're talking about sales, you're able to provide like percentage of 2019 levels. Can you do something similar? Like how many – like what percentage of claims, I guess, relative to 2019? Todd Daniels: Hey, Humphrey. This is Todd. I think if you look at second quarter 2020 and second quarter 2021, paid claim activity was pretty flat, roughly about ¥3 billion lower in 2021. And that's reflective of people having restricted movements and what Max just described. That is below, as he said, our long-term expectation for paid claims. Teresa White: Then I would say from the U.S. side, consistent with what Max said, it's based on the type of policies that people have. So in general, when you look at our short-term disability policies, you may see higher utilization there, yet, you don't see as high utilization on, for example, on accident policy. Humphrey Lee: Okay. Thank you. Operator: The next question comes from Ryan Krueger of KBW. Please go ahead. Ryan Krueger: Hi, good morning. Fred, are you able to provide any more color on the elderly care products that you're developing and in particular, how it would differ from current medical products that would be purchased by elderly individuals? Frederick Crawford: Sure. So the care product under development and a couple of things that are very important. One is the product risk involved is not to be confused with what you maybe familiar with relative to U.S. long-term care. And there are some very fundamental reasons for that. This is a supplemental product and its supplements the actual elderly care government support mechanisms. And so it's a very specific supplement to that government platform as opposed to broader universal care medical coverage. And it also is being designed to where payments are more on a lump sum basis for some of the lower levels of assisted care. And then when you move into the more significant levels of assisted care, there's more of a defined annuity type benefit. The reason I described it that way is realize you do not have the escalating benefit structures such as healthcare inflation. You don't have the tail risk, that's assumed with more of a lifetime coverage, if you will, once moving into assisted living. Therefore, you're not building nearly the reserves, and therefore, don't have nearly the interest rate risk as well. So there's several different reasons why this should not be confused, for example, with other types of riskier elderly care support, it really is a supplemental defined mechanism. The other is it plays directly off the qualifications of the government program. And so it has a more narrow definition of what is covered and what is not covered then you might be used to in the U.S. I feel it plays off those definitions. Now, one thing to keep in mind is that this is the third largest third sector platform in Japan. This is not a new area that's newly developed, it's been an existence, but it's a smaller area of product sales. To give you an idea, it's probably roughly a quarter of the size of the medical supplemental industry in Japan. The key, however, is that we expected to grow that with an aging population and what we believe, or at least suspect will be a gradual shifting of burden onto individuals or their families related to elderly care that this will be a building platform over time. And so we want to get in there now. We want to get in there with a competitive product, and we want to leverage off of our third sector prominence. So that is the strategy. We will tell you more about this and build out more around the strategy when we get to our Investor Conference because it will be more developed at that time. But it's clearly something we think could be a difference maker in the future as we move forward. Ryan Krueger: Thanks. I just had one follow-up. Are the current insurance carriers that offer that? Are they mostly, I guess the domestic life insurance in Japan and you just haven't been in the market in the past, and you're now going to enter? Frederick Crawford: They are. It's a narrower group of players then you will find with traditional first sector and some of the larger categories of third sector, notably medical. But they are largely domestic players. One other aspect of this business that's important to understand is that many of the players that build successful market share in this industry don't just sell the care insurance. They also surround the insurance with other non-insurance services that supplement elderly care. Good example would be things like smart home technology that helps prevent frankly, elderly individuals of going on claim or better managing concierge type service to help the elderly manage the many different moving parts necessary to settle into an assisted living atmosphere. So alongside this product, we're also building within a incubated business, other care like non-insurance services because that is one of the keys to building market share. So it's a larger and more expansive platform if you intend to be a leader in this business, which we do. And again, we'll build more color around that as we go forward. Ryan Krueger: Thanks. Appreciate it. Operator: We have time for one more question and that question will come from John Barnidge of Piper Sandler. Please go ahead. John Barnidge: Thanks for the opportunity. Can you maybe talk about the market opportunity to do in other states, what you briefly talked about for Connecticut? Thank you. Frederick Crawford: Sure. This is Fred again. There is about 10 states right now. In fact, Connecticut was the 10th to put together this medical family leave programs in their state. And we do believe that there's the opportunity for this to expand into further states in the future. These require typically fairly expensive legislative activities within each of the states. And because these are programs that cover effectively the employees of all the qualified or opted in employers in the states, it gives you an idea, in Connecticut, we are projecting when you add up the qualified employers who are likely to opt into this program that the coverage may include as much as a bit in excess of 1.5 million potential participants in the state of Connecticut. So this is a substantial platform. But the nature of it and the nature of the program and the fact that it is a state organized benefit program offered up to opted in employees’ means legislative activity typically needs to take place, that takes time. And obviously, it can depend on the political atmosphere and the prioritization dynamics within the state legislators. So right now 10 states, but we believe it will expand. I think a lot of that expansion, frankly, it's going to be based on the success and the receptivity of the programs that are already in place. The good news is that Connecticut is a very important client for us. We were very pleased to be awarded that. It's the capabilities of our acquired business from Zurich that allowed us to bid and be qualified to run that program and we expect to use this as a foothold to entertain additional states. John Barnidge: That was great, Fred and a follow-up to that. Yes. I know legislative action needs to occur in the remaining 40 states, but is there an opportunity with the other nine states that currently have the program? Thank you. Frederick Crawford: Interestingly enough, when you look at the other nine states, some of them outsource it like handed out to an outsource provider. Others actually do the service internally. And in fact, Connecticut was originally looking to administer internally and then move to an outside provider for greater efficiencies, quality specialization, et cetera. And so some states do it in-house, some states outsource it. So there's a mix of providers. One thing that's important is you're not taking a risk on this. And so some would consider this a – an extensive PPA platform or administrative-only platform, so you're not really competing on what you would call traditional insurance parameters, you're competing on your ability to administer the technology and service level that you drive to the consumer. So one of the reasons why we like this contract is it really sends a strong statement to the marketplace that if you're an employer, you don't get this kind of contract unless you have premier service capabilities, strong technology and great customer service, without that, you'd never qualify for these programs. And so that's what we're pleased about. John Barnidge: Thanks. Best of luck in the quarter ahead. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to David Young for any closing remarks. David Young: Thank you and thank you all for joining us here today. Looking ahead, we hope you'll join us on November 16 for our 2021 Financial Analyst Briefing. More details will follow. We look forward to speaking with you soon. If you have any additional questions, please follow-up with Investor and Rating Agency Relations. And I wish you all continued good health. Thank you. Operator: The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.
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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.