YKK is the presenting sponsor of Global Atlanta's Japan Channel. Subscribe here for monthly Japan newsletters.
Georgia-based insurance giant Aflac Inc. is still waiting for sales in Japan, its largest market, to recover after the lull introduced by the pandemic.
The dollar’s 15 percent rise in value against the yen in the last three months also impacted results, with the weaker yen showing up as lower revenue when converted into dollars for accounting purposes.
Overall, global profit for the Columbus-based firm grew 25.6 percent to nearly $1.4 billion during the second quarter on slightly lower revenue of $5.4 billion. The increase in earnings was driven in part by more than a half-billion dollars in net investment gains driven by currency and derivative moves.
In Japan, however, which accounts for about 60 percent of Aflac’s revenues, results were more muted. Premiums on a yen basis fell by 4.2 percent during the quarter to Y312.2 billion, but investment incomes climbed by 8.4 percent to Y94 billion as interest rates rose and dollar-denominated assets saw their relative value increase. Aflac Japan overall saw revenues fall 1.6 percent to Y408.3 billion, or about $3 billion.
Translated into dollars, premiums in Japan dropped 19 percent and overall revenues by almost 17 percent, demonstrating how the dollar’s dramatic strength is hitting the bottom line in the company’s largest market. Earnings per share were down 8.2 percent to $1.46 on a constant-currency basis from $1.55 in the year-ago period, but excluding the impact of the weak yen, they fell just 2.5 percent to $1.55.
Japan also saw slow sales growth as it continues to emerge from the worst of the pandemic. Many cancer insurance and other supplemental policies reached paid-up status at the same time in-person sales — the preferred purchase method for citizens who buy at banks, department stores and (as of 2015) 20,000 Japan Post locations — became challenging as restrictions on movement became more prevalent. New sales in Japan dropped by 10.7 percent in the quarter to ¥24.7 billion, or $201 million.
Chairman and CEO Daniel P. Amos said the pandemic “impacted our ability to meet face-to-face with customers, which continues to be key to a recovery in sales.”
He expected “stronger sales in the second half of the year assuming that those conditions subside, productivity continues to improve at Japan Post, and we execute on our product introduction and refreshment plans.”
Learn more here.
Read more about Aflac’s origins in the Japanese market here.