Aflac shakes off investment losses for solid third quarter

Insurance firm Aflac shook off investment losses in Europe to improve its earnings in the third quarter, buoyed by growth in sales in both Japan and the United States.

Columbus-based Aflac reported net income of $744 million, or $1.59 per diluted share, vs. $690 million, or $1.46 per share, in the third quarter last year.

Taking out investments and nonrecurring items, Aflac’s operating earnings were up nearly 14 percent to $778 million from last year’s July-September quarter. Operating earnings per share of $1.66 beat analysts’ expectations by $1.60, according to Bloomberg.

Aflac sells supplemental insurance, including cancer and disability insurance products.

The debt crisis in Europe has taken a toll on Aflac’s investment portfolio, costing the company more than $1 billion through the first six months of 2011. Aflac set about “de-risking” its balance sheet, selling off souring investments in Portuguese, Greek, Irish and Spanish financial firms.

Aflac said its pre-tax investment losses for the quarter were $83 million.

Certain investments, including some in European financial firms, resulted in losses of $390 million. That was offset by $307 million in pre-tax gains from the sale of U.S. and Japanese government securities and other Portuguese bank holdings.

Total revenue climbed 11 percent to $6 billion. Sales of group products to larger employers helped Aflac grow U.S. revenue 4 percent.

Premium income from Japan rose 16.3 percent, from sales growth and a stronger yen.

Japan accounts for around 70 percent of Aflac’s business, showing few signs of disruption from the island nation’s devastating March earthquakes and tsunami.

Aflac Chairman and CEO Dan Amos said the company set a fourth-quarter dividend of 33 cents, a 10 percent increase.