Aflac Profit Doubles as Investment Loss Narrows; Shares Gain
Aflac Inc. (AFL), the world’s biggest seller of supplemental health insurance, said first-quarter profit doubled as investment results improved. The shares gained as the company said it expects 2012 Japan sales growth of 10 percent, after previously projecting a drop.
Net income increased to $785 million, or $1.68 a share, from $389 million, or 83 cents, a year earlier, the Columbus, Georgia-based company said today in a statement. Operating profit, which excludes some investment results, was $1.74 a share, beating the $1.65 average estimate of 19 analysts in a Bloomberg survey.
Aflac, which uses a talking duck mascot to promote policies, has said it’s cutting back investments in European financial firms amid the region’s debt crisis. It hired Eric Kirsch from Goldman Sachs Group Inc. in September to manage a portfolio of about $100 billion.
“The concentration in European financials is extraordinarily high, although it’s come down,” Steven Schwartz, a Chicago-based analyst at Raymond James & Associates Inc., said by phone before the results were announced. Investors are watching “the investment portfolio in Europe and what they’re planning to do now that this new guy Kirsch is running the investment operation.”
Realized investment losses were $29 million, compared with $376 million a year earlier. Book value, a measure of assets minus liabilities, rose to $29.19 a share as of March 31 from $27.76 on Dec. 31.
Aflac gained 4.2 percent to $43.75 at 4:49 p.m. in New York in extended trading. Aflac had declined 2.9 percent this year on the New York Stock Exchange, compared with the 7.9 percent gain of the 24-company KBW Insurance Index. (KIX) Results were released after the close of regular trading.
The insurer said new annualized premium sales in Japan, the company’s largest market, jumped 54 percent, led by deals through banks. In dollar terms, new annualized premium sales were $659 million. Premium income in Japan rose 12 percent to $4.1 billion.
“The first quarter has positioned us for another strong year of sales activities in Japan,” Chief Executive Officer Dan Amos said in the statement. Aflac had projected on Jan. 31 that sales in Japan would drop as much as 5 percent in 2012.
U.S. premium income advanced 5.2 percent to about $1.2 billion.
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