Aflac, RGA Report Mixed 4Q Earnings

By Cyril Tuohy

Aflac Inc. reported fourth-quarter profit of $730 million, or $1.71 per diluted share, compared with $703 million, or $1.57 per share, in the year-ago period.

Adjusted for investment gains, the Columbus, Ga.-based life and supplemental health insurer reported operating earnings per share diluted of $1.56. That bested the average of 12 analysts surveyed by Zacks Investment Research by 8 cents a share.

Fourth-quarter revenue came to $5.32 billion, the company said.

Aflac, which has a large presence in Japan, delivered full-year 2015 profit of $2.5 billion, or $5.85 per share diluted, the company said.

CEO Dan Amos said the company’s strong fourth quarter helped it finish the year at the top of estimates for operating earnings.

Cancer and medical insurance in Japan surpassed the company’s projection, with cancer insurance sales up more than 40 percent in 2015 compared with the previous year, the company said. Aflac distributes products there through the Japan post office.

In the U.S., Amos said the company’s “one day pay” strategy, which delivers a check to claimants within 24 hours, has meant big gain in terms of consumer integrity. The company expects to execute more than 2 million one-day-pay transactions in 2016, he said.

“American consumers need cash,” he told analysts in a conference call Tuesday morning. “Paying claims quickly separates us from the competition.”

Agent recruiting in the U.S. has also improved and the company has managed to keep its retail agents with smaller accounts from bumping into the business geared toward big brokers that target larger accounts, Aflac executives said.

Changes to the way agents are compensated means Aflac is now selling into markets where the company previously struggled, said Teresa L. White, president of Aflac U.S.

RGA Income Falls, Beats Estimates

Fourth-quarter net income at Reinsurance Group of America, the St. Louis-based global reinsurer of life insurance portfolios, fell 15 percent to $163.1 million. The company blamed the decline on foreign currency fluctuations and a large reinsurance transaction in 2014.

The company also reported fourth-quarter net income of $2.46 per share diluted, compared with $2.75 per share diluted in the year-ago period, the company said.

Fourth-quarter operating income per share diluted was $2.84, beating Zacks consensus estimates of $2.49 per share diluted.

Full-year operating income decreased to $567.1 million, or $8.43 per diluted share, from $638 million, or $9.12 per diluted share, the year before, the company reported. Currency fluctuations cut 2015 operating income by $55.2 million, the company said.

Since the company is a reinsurer of life insurance risks, retail agents and brokers would not do business with Reinsurance Group of America.

“For the year, operating earnings per share of $8.43 was also strong, despite the sizable negative effect of foreign currency movements and a difficult year for our U.S. Mortality business,” said CEO Greig Woodring, in a news release.

Lower income due to foreign currency transactions were offset by the strong performance of the company’s Asia Pacific and Canada businesses, he added.

RGA reported earnings Jan. 28.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].

Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at [email protected].