Aflac’s first-quarter earnings exceed expectations

On a day when Columbus-based supplemental insurer Aflac flirted with a 52-week stock high, the company announced strong first-quarter earnings that exceeded expectations of Wall Street analysts.

Aflac reported first-quarter revenue of $5.5 billion, which was a 4.3 percent increase from the first quarter of last year. The stronger revenue, coupled with less than anticipated payouts, resulted in a net earnings of $731 million for the quarter. That compares to $663 million for the same period a year ago.

The earnings came in at $1.74 per diluted share, which exceeds analysts’ estimates of $1.63 per share.

The earnings were announced after the market closed Tuesday, where Aflac’s stock ended at $68.00 per share. Earlier in the day, the stock price reached a 52-week high of $68.68 before falling back. It still closed up 13 cents from the previous day.

Senior Vice President, Investor and Rating Agency Relations Robin Y. Wilkey said Aflac has benefited from the recent market.

“We have benefited from being what analysts think of as a safe haven because our products are not what they call interest sensitive,” Wilkey said. “If you bought an annuity or those type of products and the stock market has been very volatile, we are considered a safe haven and we like that.”

Aflac Chairman and CEO Dan Amos said Aflac U.S. produced solid financial and sales results.

“We continue to believe that the changes we made to our career and broker management infrastructure have created a foundation for greater long-term growth opportunities,” he said.

One of the reasons for strong U.S. earnings was a new One Day Pay plan that was introduced last year on certain products and fully kicked in during the first quarter.

“It took as a while to get the ball rolling,” Wilkey said. “The good thing about it is it’s online and it has so many checks and balances incorporated in it. Normally, we would have to mail it back to you, but this will come back at you immediately.”

But it is also a time the company was being careful in how it invested its money.

“I would remind you that with interest rates at significantly depressed levels and a return to market volatility, it is difficult to invest cash flows at attractive yields while maintaining a prudent risk tolerance,” Amos said.

The company also spent $600 million to repurchase 10.2 million shares of the common stock.

The company also announced an increase in the second-quarter dividend for the 33rd consecutive year. A dividend of 41 cents per share will be paid to shareholders of record at close of business on May 18. The dividend is payable on June 1.

“Dan Amos and the board remain committed to an annual increase with our dividends per share,” Wilkey said. “... We manage the company for the long term but when it comes to returning value to the shareholders, first and foremost it is the cash dividend.”

This story was originally published April 26, 2016 at 4:23 PM with the headline "Aflac’s first-quarter earnings exceed expectations."