Why Is Aflac (AFL) Up 6% Since Last Earnings Report?

A month has gone by since the last earnings report for Aflac (AFL). Shares have added about 6% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Aflac due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Aflac's Q4 Earnings Miss on Higher Benefits and Claims

Aflac reported fourth-quarter 2023 adjusted earnings per share (EPS) of $1.25, which missed the Zacks Consensus Estimate by 15%. The bottom line decreased from $1.29 per share reported in the year-ago period.


Aflac’s revenues decreased 5.7% year over year to $3.78 billion in the quarter under review. The top line missed the consensus mark by 15%.

The weak fourth-quarter results were due to higher benefits and claims, lower adjusted net investment income and declining profit levels from the U.S. businesses. However, improving profit levels in the Japan segment partially offset the negatives.

Q4 Performance

Adjusted net investment income declined 5.4% year over year to $795 million.

Total net benefits and claims of $2.1 billion increased 2.4% year over year in the fourth quarter. Total acquisition and operating expenses increased 2.1% year over year to $1.4 billion.

Pre-tax earnings declined 46.3% year over year to $289 million in the fourth quarter.

Inside AFL’s Segments

Aflac Japan

The segment’s adjusted revenues decreased 7.7% year over year to $2.5 billion in the quarter under review. This missed the Zacks Consensus Estimate by 1.5%. Total net earned premiums of $1.8 billion dropped 12.5% year over year due to limited pay products attaining paid-up status and the implementation of a reinsurance transaction earlier. This metric missed the Zacks Consensus Estimate by 3%.

Adjusted net investment income increased 8.4% year over year to $655 million due to higher variable investment income and lower hedge costs. Pre-tax adjusted earnings of the segment amounted to $755 million, which increased 4.9% year over year in the fourth quarter. This metric beat the estimate by 0.4%.

New annualized premium sales of $107 million deteriorated 2.6% year over year. The benefit ratio of the segment was 66.1% in the fourth quarter.

Aflac U.S.

The segment’s adjusted revenues increased 1.1% year over year to $1.6 billion in the quarter under review. This missed the Zacks Consensus Estimate by 1.9%. Total net earned premiums climbed 1.1% year over year to $1.4 billion due to its growth initiatives. This metric missed the Zacks Consensus Estimate by 2%.

Adjusted net investment income of $211 million climbed 9.9% year over year on the back of increased floating rate income, variable investment income and a move toward higher-yielding fixed-income investments. The metric beat the Zacks Consensus Estimate by 3.3%. Pretax adjusted earnings of the segment were $302 million, down 10.9% year over year in the fourth quarter thanks to higher benefits recognized. The metric beat the Zacks Consensus Estimate by 1.8%.

Aflac’s U.S. sales of $559 million grew 2.6% year over year. The fourth-quarter benefit ratio came in at 44.6%.

Full-Year Update

Adjusted 2023 EPS improved 9.9% from a year ago to $6.23. Total revenues fell 2.3% to $18,701 million. While net earned premiums decreased 5.2% to $14,123 million, adjusted net investment income fell 2.1% to $3,447 million.

Financial Position (as of Dec 31, 2023)

Aflac exited the fourth quarter with total cash and cash equivalents of $4.3 billion, which increased from $3.9 billion at 2022-end. Total investments and cash of $113.6 billion decreased from $117.4 billion at 2022-end. Total assets fell to $126.7 billion from $131.7 billion at 2022-end.

Adjusted debt decreased to $6.8 billion at the fourth-quarter end from $7.1 billion at 2022-end.

Total shareholders' equity of $22 billion increased from $20 million at 2022-end.

Adjusted debt to adjusted capitalization, excluding accumulated other comprehensive income, came in at 19.7%, which improved 120 basis points (bps) from 2022-end.

While it has no debt maturities in less than a year, total debt maturities worth $1.3 billion are expected within the next five years.

Adjusted book value per share increased 10.1% year over year to $47.55.

Adjusted return on equity, excluding foreign currency impact of 14.2%, improved 300 bps year over year.

Capital Deployment

Aflac bought back 8.7 million shares worth $700 million in the fourth quarter. It had 77.7 million shares left for buyback as of the fourth-quarter end.

Management announced dividends of 50 cents per share for the fourth quarter of 2023, indicating a rise of 19% year over year. The dividend will be paid out on Mar 1, 2024, to shareholders of record as of Feb 21.


Aflac estimates improved sales in its Japan business for 2024, buoyed by product launches, product updates, distribution strategies and Japan Post performance. Its new medical product, which was introduced in mid-September, should continue to enhance results.

Management also remains optimistic about strong sales results within its U.S. business. Improving productivity, contributions from platforms like network, dental and vision and group life, and disability are expected to continue supporting the results. The company expects to surpass the $1.8 billion mark in U.S. sales by 2025-end.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

VGM Scores

Currently, Aflac has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.


Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. Notably, Aflac has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Aflac is part of the Zacks Insurance - Accident and Health industry. Over the past month, Unum (UNM), a stock from the same industry, has gained 5%. The company reported its results for the quarter ended December 2023 more than a month ago.

Unum reported revenues of $3.15 billion in the last reported quarter, representing a year-over-year change of +5.1%. EPS of $1.79 for the same period compares with $1.43 a year ago.

Unum is expected to post earnings of $1.97 per share for the current quarter, representing a year-over-year change of +5.4%. Over the last 30 days, the Zacks Consensus Estimate has changed +4%.

Unum has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.

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