On July 31, 2024, Aflac Inc (AFL, Financial) released its 8-K filing for the second quarter of 2024, showcasing a solid financial performance that surpassed analyst expectations.
Company Overview
Aflac Inc offers supplemental health insurance and life insurance in the United States and Japan. The company has expanded its product offerings to include accident, dental and vision, disability, and long-term-care insurance. Aflac markets its products through independent distributors, selling the majority of its policies directly to consumers at their workplaces and also through digital mediums. The company operates in two primary segments: Aflac Japan, which generates the majority of the revenue, and Aflac U.S.
Q2 2024 Financial Highlights
Aflac Inc reported total revenues of $5.1 billion for the second quarter of 2024, slightly down from $5.2 billion in the same period last year. However, net earnings rose to $1.8 billion, or $3.10 per diluted share, compared to $1.6 billion, or $2.71 per diluted share, a year ago. This increase was driven by net investment gains of $696 million, or $1.23 per diluted share, compared to $555 million, or $0.92 per diluted share, in the previous year.
Adjusted Earnings and Investment Income
Adjusted earnings for the quarter were $1.0 billion, reflecting an 8.5% increase from $954 million in Q2 2023. Adjusted earnings per diluted share rose by 15.8% to $1.83. The company's variable investment income exceeded long-term return expectations by nearly $1 million. However, the weaker yen/dollar exchange rate negatively impacted adjusted earnings per share by $0.07.
Segment Performance
Aflac Japan: In yen terms, net earned premiums were ¥267.3 billion, down 5.7% from the previous year. Adjusted net investment income increased by 28.4% to ¥113.0 billion. Total adjusted revenues in yen rose by 2.3% to ¥381.2 billion, while pretax adjusted earnings increased by 18.6% to ¥134.5 billion. In dollar terms, net earned premiums decreased by 16.9% to $1.7 billion, while adjusted net investment income increased by 13.8% to $725 million.
Aflac U.S.: Net earned premiums increased by 2.1% to $1.5 billion, driven by improved persistency. Adjusted net investment income rose by 7.4% to $218 million. Total adjusted revenues were up by 1.3% to $1.7 billion, and pretax adjusted earnings increased by 3.8% to $383 million.
Balance Sheet and Cash Flow
As of June 30, 2024, Aflac Inc reported shareholders' equity of $26.0 billion, or $46.40 per share, compared to $20.4 billion, or $34.30 per share, a year ago. The company also declared a third-quarter cash dividend of $0.50 per share, payable on September 2, 2024.
Key Financial Metrics
| Metric | Q2 2024 | Q2 2023 | % Change |
|---|---|---|---|
| Total Revenues | $5.1 billion | $5.2 billion | (0.7)% |
| Net Earnings | $1.8 billion | $1.6 billion | 12.5% |
| Adjusted Earnings | $1.0 billion | $954 million | 4.8% |
| Adjusted EPS | $1.83 | $1.58 | 15.8% |
Analysis and Outlook
Aflac Inc's strong performance in Q2 2024, despite a slight decline in total revenues, highlights the company's resilience and effective investment strategies. The significant increase in net earnings and adjusted earnings per share underscores the company's ability to generate profitable growth. However, the weaker yen/dollar exchange rate remains a challenge, impacting the company's earnings.
"Aflac delivered very solid earnings for the quarter and the first six months. We have continued to actively concentrate on generating profitable growth in the U.S. and Japan with new products and distribution strategies. We believe our strategy will continue to create long-term value for shareholders," stated Aflac Incorporated Chairman, Chief Executive Officer, and President Daniel P. Amos.
Overall, Aflac Inc's Q2 2024 earnings report demonstrates the company's robust financial health and strategic focus on growth, making it an attractive consideration for value investors.
Explore the complete 8-K earnings release (here) from Aflac Inc for further details.
