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Aflac sees premium income rise in US, Japan in Q2; FY'18 guidance increased


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Aflac sees premium income rise in US, Japan in Q2; FY'18 guidance increased

Aflac Inc. reported second-quarter adjusted earnings of $835 million, or $1.07 per share, versus $731 million, or 92 cents per share, a year earlier.

The S&P Capital IQ consensus normalized EPS estimate for the quarter was 99 cents.

Net earnings came in at $832 million, or $1.07 per share, compared with $713 million, or 89 cents per share, in the year-ago quarter.

Total revenues increased by 3.0% year over year to $5.59 billion from $5.43 billion.

Aflac Japan premium income, net of reinsurance agreements, rose 0.2% year over year to $3.2 billion. The segment's pretax adjusted earnings rose 5.7% to $836 million. Net investment income, net of amortized hedge costs, increased 8.8% to $606 million. Aflac Japan's growth rates in dollar terms for the second quarter were magnified as a result of the stronger yen/dollar exchange rate.

The average yen/dollar exchange rate in the second quarter of 2018 was 109.14, or 1.8% stronger than the average rate of 111.10 in the second quarter of 2017.

Total revenues for the segment were up 2.1% to $7.7 billion. Third sector sales, which include cancer, medical and income support products, increased 16% in the quarter. Total new annualized premium sales increased 14% to $265 million.

Aflac U.S. premium income rose 2.7% to $1.4 billion in the period. Net investment income rose 1.1% to $182 million, driven by higher income from floating-rate assets and an offset from the drawdown of excess capital in the U.S. Total revenues increased 2.5% to $1.6 billion. The pretax adjusted profit margin for the U.S. segment was 21.1%, compared with 21.0% a year ago.

Aflac U.S. total new annualized premium sales increased 3.9% in the quarter to $370 million.

The company raised its 2018 adjusted EPS guidance from a range of $3.72 to $3.88 to the range of $3.90 to $4.06, assuming the 2017 weighted-average exchange rate of 112.16 yen to the dollar. If the yen averages 110 to 115 to the dollar for the third quarter, the company expects adjusted earnings per share to be about 87 cents to $1.02 in the third quarter.