April 29 (Bloomberg) — Aflac Inc., the largest seller of supplemental health insurance, posted first-quarter profit that beat analysts' estimates, sending shares higher.
Net income declined 18 percent to $732 million, or $1.60 a share, from $892 million, or $1.90, a year earlier, Columbus, Georgia-based Aflac said today in a statement posted on its website. Operating earnings, which exclude some investing results, were $1.69 a share, beating the $1.58 average estimate of 19 analysts surveyed by Bloomberg.
Chief Executive Officer Dan Amos, 62, counts on Japan to generate about three-quarters of Aflac's profit. Results have been pressured as the country's currency weakened, and Aflac has been shifting some Japanese investments to U.S. bonds as yields on yen-denominated debt remain near record lows.
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Aflac "faces several headwinds including low interest rates in Japan," Barclays Plc analysts led by Jay Gelb said in an April 16 research note. The company "is in the process of repositioning its investment portfolio to enhance yield and diversify its holdings."
Aflac rose 1.8 percent to $62.83 at 3:47 p.m. in New York.
The firm, which uses a talking duck in advertisements, has been working to increase sales in Japan through marketing partnerships, such as with Japan Post Holdings Co., after higher prices for some products limited results. Sales have been pressured in the U.S. amid uncertainty over the health-care overhaul.
Weaker yen
"Many middle-market customers in Japan purchase insurance through the Japan postal system, which is a previously untapped area for Aflac," Gelb wrote. "The number of post offices selling Aflac cancer products will gradually increase from 1,000 locations to 20,000."
The yen weakened to about 103 per dollar on March 31, compared with about 94 a year earlier. Aflac converts results from the Japanese currency for reporting purposes.
Japan raised its national sales tax to 8 percent from 5 percent on April 1 to help pay for an aging population in a nation with the world's heaviest debt load. That can depress consumer spending, and Aflac has said the levy will cost it about 3 cents per share this year.
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