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Aflac's (AFL) Q1 Earnings and Revenues Surpass Estimates

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Aflac Incorporated AFL reported first-quarter 2021 adjusted earnings per share of $1.53, which outpaced the Zacks Consensus Estimate by 27.5%. Further, the bottom line grew 26.4% year over year.

The company’s results gained momentum from higher revenues and the favorable effect of share repurchases.

Moreover, total revenues of $5.9 billion surpassed the Zacks Consensus Estimate by 4.35%. The top line also improved 13.7% year over year.

Annualized adjusted return on equity excluding foreign currency impact, was 17%, which improved 120 basis points (bps) from the prior-year quarter.

Further, total acquisition and operating expenses were up 1.9% year over year to $1.5 billion.

Aflac Price, Consensus and EPS Surprise

Aflac Incorporated Price, Consensus and EPS Surprise
Aflac Incorporated Price, Consensus and EPS Surprise

Aflac Incorporated price-consensus-eps-surprise-chart | Aflac Incorporated Quote

Favorable Results at Aflac Japan

Total revenues were up 1% year over year to $3.8 billion owing to a 9.8% rise in net investment income, partly offset by a 0.9% decline in premiums. Constrained sales from the impact of pandemic conditions and limited-pay products reaching paid-up status weighed on premium growth. Pre-tax adjusted earnings improved 3.7% from the prior-year quarter to $887 million.

Weak Performance at Aflac U.S.

Total revenues fell 3.5% year over year to $1.6 billion due to lower premiums on account of decline in sales activity. Net premium income slipped 4.1% year over year to $1.4 billion. Adjusted net investment income of $176 million slid 0.6% from the prior-year quarter.

Pre-tax adjusted earnings from the U.S. segment were $445 million, up 36.5% year over year, primarily on lower incurred claim.

Share Repurchase & Dividend Update

Aflac bought back 13.4 million shares worth $650 million during the first quarter. The company had 85.7 million shares remaining under its buyback program as of Mar 31, 2021.

Solid Financial Position (as of Mar 31, 2021)

Total investments and cash were $143.3 billion, up 4.6% from the 2020-end level.

Total assets were $158.2 billion, up 4.3% from the 2020-end level. Shareholders' equity (excluding AOCI) was $32.1 billion, up 21.6% from the level at 2020 end.

Outlook for the First Half of 2021

Although the COVID-19 pandemic is likely to put pressure on sales activity across both the United States and Japan during the first half of 2021, the company anticipates some decent sales figures in the latter half of the year.

The company estimates sales in Japan to improve in the second half of the year as its largest agent in the region, Japan Post Group, resumed proactive sales in April.

Zacks Rank

Aflac currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurers

Of the insurance industry players, which have reported first-quarter results so far, earnings of RLI Corp. RLI, W. R. Berkley Corp. WRB and The Travelers Companies, Inc. TRV beat the respective Zacks Consensus Estimate by 17.57%, 21.35%, and 11.89% each.

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