Aflac reports $2.4 billion profit in quarter, which includes federal tax-reform benefit

In a quarter during which major federal tax reform was passed and signed into law, insurance company Aflac reported a profit, or net earnings, of $2.4 billion, which is $5.95 per diluted share.

That was in comparison to the fourth quarter of 2016 in which the Columbus-based supplemental health and life insurer posted a profit of $751 million, or $1.84 per diluted share.

More: President Trump meets with Aflac and TSYS employees in Oval Office

Aflac said the financial data in the October-December period includes an estimated $1.7 billion benefit for the company due to the federal Tax Cuts and Jobs Act passed by Congress and signed into law by President Trump in late December.

The quarterly profit was on total revenues of $5.4 billion, which was down from $6 billion in the final three months of 2016.

Operating earnings, which take out one-time items such as investment gains and losses — and in this report, the 1.7 billion tax reform benefit — came in at $633 million, or $1.60 per diluted share, in the fourth quarter, which was up 7.5 percent from $589 million, or $1.44 per share, in the same period a year ago.

“We are pleased with the company’s overall performance for the year,” Aflac Chairman and Chief Executive Officer Dan Amos said in a statement. “Aflac Japan, our largest earnings contributor, generated strong financial and third-sector sales results for the year.”

“Looking ahead to 2018, sales of third-sector products face challenging comparisons, especially in the early part of the year due to the conversion of the Japan branch,” he said. “However, we expect to see improvements in third-sector sales in the second half of the year. As we said during our outlook call last month, in 2018, we anticipate that third-sector earned premium will continue its steady growth in the 2 percent to 3 percent range, reflecting Aflac’s stable sales and high persistency in Japan.”

In his 2018 outlook for the U.S. market, which the company has been working to improve and grow faster in recent years, the CEO said expectations are that earned premium will increase between 2 percent and 3 percent, while new annualized premium sales should rise 3 percent to 5 percent.

“We remain committed to maintaining strong capital ratios on behalf of our policyholders and balance this financial strength with a focus on increasing the dividend, repurchasing shares and reinvesting in our business,” said Amos, pointing out the firm’s board of directors approved a dividend increase of 15.6 percent. Aflac also anticipates buying back between $1.1 billion and $1.4 billion in shares of its common stock this year.

Amos, in the earnings report, also mentioned his company’s pledge to pump roughly $250 million of the tax reform savings into its U.S. operations over the next three to five years in various areas. The “strategic” spending will focus on growing business in the U.S., increasing employee benefits and training programs, while also putting more cash into technology and digital businesses.

“As we look to 2018 and take into account U.S. tax reform, our objective is to produce stable operating earnings per diluted share of $7.45 to $7.75, assuming the 2017 weighted-average exchange rate of 112.16 yen to the dollar,” the CEO said.

As it was releasing its fourth-quarter financial information Wednesday, Aflac also reported full-year 2017 numbers. The data show the company posting a profit, or net earnings, of $4.4 billion for the year, or $10.96 per diluted share, up from $2.7 billion, or $6.46 per share, in 2016. That was on total revenues of $21.7 billion, down slightly from $22.6 billion in 2016.

Operating earnings for the year, which take out one-time items and the estimated $1.7 billion tax-reform benefit, were $2.7 billion, up from $2.69 billion in the prior year.

Aflac released its earnings report Wednesday after the close of the New York Stock Exchange, where its shares are traded. For the day, its shares slipped 37 cents apiece to close at $88.20. The stock’s 52-week trading range is a high of $91.73 per share and a low of $66.50 per share.

This story was originally published January 31, 2018 at 6:35 PM with the headline "Aflac reports $2.4 billion profit in quarter, which includes federal tax-reform benefit."