AFLAC Incorporated (NYSE: AFL) stock fell over 1.8% on 28th October, 2020 (as of 10:36 am GMT-4; Source: Google finance) after lower than expected third quarter of FY 20 performance. In yen terms, Aflac Japan’s net premium income has fallen 3.3% to ¥336.5 billion during the third quarter, mainly due to limited-pay products reaching paid-up status. Aflac U.S. net premium income fell 2.6% to $1.4 billion in the third quarter. Total revenues of the segment fell 1.5% to $1.6 billion, mainly due to a decline in earned premium from reduced sales activity and lower net investment income.
The company reported the adjusted earnings in the third quarter were $994 million, compared with $863 million in the third quarter of 2019, which represents an increase of 15.2% driven mainly by favorable effective tax rates. Total investments and cash at the end of September 2020 were $146.1 billion, compared to $139.5 billion at September 30, 2019.
AFL in the third quarter of FY 20 has reported the adjusted earnings per share of $1.39, while reported the adjusted revenue of $5.67 billion in the third quarter of FY 20
Additionally, the company has declared the fourth quarter dividend of $0.28 per share, which will get paid on December 1, 2020 to shareholders of record at the close of business on November 18, 2020. In the third quarter, Aflac had repurchased $400 million, or 10.9 million of its common shares. At the end of September 2020, the company had 110.9 million remaining shares authorized for repurchase.
On the other hand, the company has taken several actions to combat the pandemic in Japan and the U.S. Early in the fourth quarter, the company had offered a voluntary separation plan to eligible employees, which is expected to result in a reduction in the U.S. insurance and corporate workforce of approximately 9%. The company expects run-rate annual savings to be in the range of $45 to $50 million and will record a one-time expense related with the separation plan of approximately $45 million in the fourth quarter. The pandemic has affected the sales both in the United States and Japan. The company anticipates this to significantly affect full year sales results in both countries, with the potential for a modest sales improvement for the remainder of the year, contingent upon the pace of economic recovery.