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Aflac Posts Profit Above Estimates as U.S. Premium Income Swells

Aflac, the world's largest seller of supplemental disability insurance, said on Tuesday that earnings rose in the first quarter as premium income in the United States climbed nearly 11%.

Aflac, which insures people against the cost of illness and injury, said operating earnings, which analysts use to measure performance because it excludes investments, were $407 million, or 82 cents a share, up nearly 14% from the year earlier.

But overall, Aflac's earnings totaled $416 million, or 84 cents a share, up from $375 million, or 74 cents a share, in the year-earlier quarter.

Analysts, on average, had expected Aflac to earn 79 cents a share, according to Reuters Estimates.

Earnings were not as good in the company's much larger Japanese market, where Aflac does about 70% of its business. But even there analysts saw hope.

"The news was modestly good on both sides of the Pacific," said Craig Weber, an analyst with Celent. "Sales in Japan are still declining, but the benefits ratio is improving."

The benefits ratio is the amount of claims paid out, compared to premiums taken in. So even though total new sales in Japan decreased nearly 11% in the quarter as competition heated up, premium income rose 2.6%.

U.S. earnings were the star performer. Premium income there rose nearly 11% to $961 million.

Chief Executive Daniel Amos said that he was "pleased" with the results and with the company's outlook for the remainder of the year. Amos has continually said Aflac will have 15% earnings per share growth in 2007.

While sales in Japan have been hurt by competition from Japanese banks and other institutional sellers, Amos has said he expects to see continued growth there in the second half as new Aflac products hit the market.

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