Profit Declines at Aflac

The insurer records lower investment gains and revenue declines in Japan.
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posted a drop in third-quarter earnings as results were hurt by lower investment gains and weakness in the Japanese yen relative to the dollar.

The insurer, which derives a significant portion of its business from Japan, said its net income fell to $367 million, or 73 cents a share, from $455 million, or 90 cents a share, a year earlier.

The decline came amid lower realized investment games, which fell to $7 million, or 1 cent a share, in the latest quarter from $89 million, or 18 cents a share, a year ago. Operating earnings, which exclude these gains, rose to $363 million, or 72 cents a share, from $333 million, or 66 cents a share, a year earlier.

On this basis, earnings matched the average forecasts of analysts polled by Thomson First Call.

Aflac's revenue was flat at $3.67 billion, hurt in part by currency exchange from the yen to the dollar.

Aflac Japan's total new annualized premium sales declined 11.9% to 27.3 billion yen, or $235 million, in the third quarter. The company said there's a "challenging market" in Japan, and medical-related sales were weak in the quarter.

In the U.S., new annualized premium sales rose 11.7% to $332 million.

Aflac plans to boost its dividend from its current 13-cent level. The company will pay a dividend of 16 cents a share Dec. 1 to shareholders of record Nov. 17. The dividend will jump to 18.5 cents in March.

The company backed its guidance for 2006 operating earnings of $2.92 a share. Analysts see earnings of $2.90 a share.

For 2007, Aflac anticipates a 15% to 16% increase in operating earnings per share, excluding the impact of the yen.