Investors Flock to Aflac

The health and life insurer's shares climbed Wednesday after it reported gains in premiums and net income

Health and life insurance provider Aflac (AFL) earned more during recent months as premiums rose in the U.S. and Japan. After the news investors bought the Columbus, (Ga.) company's stock on Apr. 25.

The insurer, best known for its cantankerous duck mascot, provides supplemental health and life insurance in the U.S. and Japan. Most of Aflac's policies are individually underwritten and marketed at work sites through independent agents, with premiums paid by the employee.

Nearly three quarters of the company's revenues come from Japan. Aflac Japan's insurance products are designed to help pay for costs that are not reimbursed under Japan's national health insurance system. It also offers ordinary life insurance and other products such as living benefit life plans and care products.

Aflac's net earnings were $416 million during the first quarter ended March 31, including things like included realized investment gains of $9 million, compared with $375 million a year ago. "Overall, we are pleased with Aflac's results for the first quarter of 2007," CEO Daniel P. Amos said in a press release late Apr. 24.

The company's total revenues were $3.8 billion during the first quarter, compared with $3.6 billion in the same quarter of 2006. Premium income in the U.S. increased 10.9% year over year to $961 million during the first quarter. Japanese premium income in dollars rose 2.6% year over year to $2.2 billion.

Investors bid up Aflac's stock nearly 5.5% to $51.42 per share in early afternoon trading on the New York Stock Exchange.

In one example of how market players responded to the news, Standard & Poor's Equity Research hiked a full-year 2007 earnings per share (EPS) estimate on Aflac by 3 cents to $3.28 per share. Analyst Tanjila Shafi raised 12-month target price on the stock by $4 to $57, citing Aflac's quarterly results. (S&P, like, is owned by The McGraw-Hill Companies.)

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