Aflac Inc., the largest seller of supplemental health insurance, posted first-quarter profit that beat analysts’ estimates as margins widened.
Operating earnings, which exclude some investing results, were $1.69 a share, Columbus, Georgia-based Aflac said today in a statement, topping the $1.58 average estimate of 19 analysts surveyed by Bloomberg. Net income declined 18 percent to $732 million, or $1.60 a share, from $892 million, or $1.90, a year earlier, as the yen weakened and sales slowed.
Chief Executive Officer Dan Amos, 62, counts on Japan to generate about three-quarters of Aflac’s profit. Results have been pressured as the country’s currency weakened, and Aflac has been shifting some Japanese investments to U.S. bonds as yields on yen-denominated debt remain near record lows.
Aflac “is in the process of repositioning its investment portfolio to enhance yield and diversify its holdings,” Barclays Plc analysts led by Jay Gelb said in an April 16 research note.
Aflac rose 2.4 percent to $63.36 at 4 p.m. in New York, the biggest increase since August. The company posted a version of the earnings release on its website before the close of trading.
The insurer said the pretax operating profit margin in Japan climbed to 22 percent from 21.5 percent a year earlier. Aflac said it benefited from dollar-denominated investment income at the business.
Sales slowed in Japan compared with a year earlier, when customers ramped up purchases ahead of a premium increase. Aflac said new annualized premium sales declined 49 percent to 27.6 billion yen.
The firm, which uses a talking duck in advertisements, has been working to increase sales in Japan through marketing partnerships, such as with Japan Post Holdings Co., after increasing prices for some products. New annualized premium sales fell 4.4 percent in the U.S., and Aflac said some customers delayed buying coverage amid uncertainty over the health-care overhaul.
Book value, a measure of assets minus liabilities, increased to $34.53 a share on March 31 from $31.82 three months earlier. Aflac said it repurchased $415 million of stock in the first quarter.
Aflac recorded $36 million of investment losses in the period, compared with a net gain of $102 million a year earlier.
The yen weakened to about 103 per dollar on March 31, compared with about 94 a year earlier. Aflac converts results from the Japanese currency for reporting purposes.