Aflac Incorporated · NYSE:AFL
Aflac — Q1 2020 Earnings Presentation
23 slides from Aflac's earnings presentation, Apr 29, 2020
Slide 1: Se Vy
Se Vy
Slide 2: Forward-Looking Statements and Non-U.S.GAAP Financial Measures
Forward-Looking Statements and Non-U.S.GAAP Financial Measures ‘The Private Securities Litigation Reform Actof 1995 provides “safe harbor’ to encourage companies to provide prospective information, so long as those informational statements are identified as forward-looking and are accompanied by mea
Slide 3: Our Response to COVID-19
ur Response to COVID-19 Fc c ICUSI nN W mp Working from Home + Over 75% of our employees in Japan + Over 90% of our employees in the U.S. Enhanced benefits for employees + Extended paid leave * Cover 100% of the cost for COVID- 19 tests and waive copays for related telemedicine for U.S. employees Fi
Slide 4: Sales Affected in Final Weeks of 1Q20
Sales Affected in Final Weeks of 1Q20 Challenges remain at least for the near term Total Sales day eLaT AVA Drivers est.A Aflac U.S. -5.2% -55% COVID-19 Aflac Japan -25.4% -65% COVID-19 and Japan Post efending our distribu franchises + Focused on exclusive agencies and walk-in shops + Worksite sales
Slide 5: Continued Strength in Core Benefit Ratios
Continued Strength in Core Benefit Ratios COVID-19 in early stages with little claims impact 2020 Benefit 1Q20 2020 Benefit 1Q20 Ratio Outlook Benefit Ratio Ratio Outlook Benefit Ratio 68.0 to 70.0% 69.4% 49.0 to 51.0% 48.1% Aflac Japan Aflac U.S. * ¥1.8 million in 1Q20 COVID-19 claims - No material
Slide 6: COVID-19 Claims Sensitivity
COVID-19 Claims Sensitivity + The promises we make to our policyholders when they need us most + Our strong insurance financial strength ratings and access to capital + Preserving our strong regulatory standing with transparent communication + The strength of the franchise and ability to defend and
Slide 7: Group Benefits Acquisition
Group Benefits Acquisition True Group Life & Disability Benefits - “buy-to-build” growth strategy Aflac Strategic Rationale Zurich Group Benefits Market Expansion Large-Case Orientation Opportunity Deepen Existing A New Entrant Growth Account Penetration Platform Increase Broker Seasoned Team of Dis
Slide 8: Global Investments First Quarter Financial Highlights
Global Investments First Quarter Financial Highlights U.S. GAAP Pretax Impairments / Loss Reserves — Loan credit loss reserves — $82 million; includes CECL provision, $72 million — Available-for-sale reserves — $63 million, Energy Stable Net Investment Income — First quarter up $25 million versus pl
Slide 9: Proactive De-Risking Has Defensively Positioned Our Portfolio
Proactive De-Risking Has Defensively Positioned Our Portfolio Strategic Asset Allocation, Greater Diversification and Capital Efficiency Cumulative De-risking Cumulative De-risking (Sbn) $8.5 Since 2016 de-risked $8.5bn $3.5 Fixed Maturities BBB and Fallen Angel Exposure’ Total BBB —BBB- (included i
Slide 10: Consolidated Portfolio Overview
Consolidated Portfolio Overview * Asset Allocation Quality’ AUM: $123 billion Avg. Credit Quality: A 42.8% ‘SAA goal of diversification ee ee 47.5% 456% 17.3% 25% 13% ay ene 72% 8.4% 101% 9.2% 57m, 5 505 | sik cee ee = BEE = = JGB Yen Prvate aes USD Fixed? USD Fixed? USD Floating? Growth AAA AAS AA
Slide 11: Portfolio Stress Test Under Global Recession Assumptions
Portfolio Stress Test Under Global Recession Assumptions Vulnerable Total Sector Vulnerable Stress Case Loss Seite BUM sliced Fixed Maturities (Sbn) ($bn) % of Fixed Maturities AUM! Energy $5.0 $2.2 Cet een pee Servicer holdings crn ews ne es Transportation $39 sos 020% (emery onde oer ieatesserers
Slide 12: MML Portfolio Benefits from Disciplined Underwriting
MML Portfolio Benefits from Disciplined Underwriting Well diversified, 100% first lien, low leverage portfolio MML Portfolio Overview as of March 31, 2020 MML Portfolio Statistics FREES ESEni * Utilize best in class external managers for diversity of underwriting and market positioning IGS saan) Low
Slide 13: CRE Portfolio is Well-Diversified by Region and Property Type
CRE Portfolio is Well-Diversified by Region and Property Type Conservative Underwriting Discipline w as of March 31, 2020 Portfolio Statistics TRE CML + 100% investment grade equivalent Conservative average LTV of 60%! ‘Amortized Cost Net of Reserves ($mm) $5,616 $1,729 - + 76% of total exposure is
Slide 14: 1Q20 Financial Position versus 1Q19
1Q20 Financial Position versus 1Q19' Entering the crisis with strength and capacity in margins, capital and liquidity Aflac U.S. Aflac Japan ty oo Aflac Japan SMR (%) Benefit Ratio 1,200 1043 59.0% 800 400 O+ 7 * Adj. Expense Adj. Expense Mar. 2019 Dec. 2019 Mar. 2020 Adi ROE Ratio Ratio = SMR ex-AF
Slide 15: Reinforced Strong Capital and Liquidity
Reinforced Strong Capital and Liquidity Proactive Measures to Bolster Li ity and Capital Liquidity * $4.8 billionof cash at the holding company’, including: * $1.5 billion of recent senior unsecured debt issuance optimizing yen and dollar financing mix, while managing duration and low cost of capita
Slide 16: Appendix
Appendix
Slide 17: Definitions of Non-U.S. GAAP Financial Measures
Definitions of Non-U.S. GAAP Financial Measures Aflac defines the non-U.S. GAAP measures included in this presentation as follows: The Company defines adjusted earnings as the profits derived from operations. The most comparable U.S. GAAP measure is net earnings. Adjusted earnings are adjusted reven
Slide 18: Definitions of Non-U.S. GAAP Financial Measures
Definitions of Non-U.S. GAAP Financial Measures * The Company defines adjusted earnings per share (basic or diluted) to be adjusted earnings for the period divided by the weighted average outstanding shares (basic or diluted) for the period presented. The most comparable U. S. GAAP measure is net ea
Slide 19: Strong Liquidity
Strong Liquidity Reinforced by recent issuance in March and April 2020; nearest maturity is 2023 Debt Maturity Profile ($ millions)* $1,600) = Yen Hybrid Call Date = Yen Senior (USD Equivalent) $1,400 USD Senior $1,200 Liquidity bolstered by recent issuance: $1,000 - ¥57 bn Global Yen senior notes o
Slide 20: 1Q20 Financial Position
1Q20 Financial Position’ Benefit ratios and pretax profit margins provide capacity to absorb elevated losses Aflac Incorporated 1Q20 Ayoy Aflac Japan 1Q20 Ayoy Net EPS $0.78 -36.6% Total Net Premiums ¥343.1 bn -2.1% Adjusted EPS* $1.21 8.0% Net Investment Income 75.9bn 2.5% Adjusted EPS ex-FX* $1.20
Slide 21: Reconciliation of U.S. GAAP Book Value per Share
Reconciliation of U.S. GAAP Book Value per Share’ (Three Months Ended March 31, In Millions of Dollars) 2020 U.S. GAAP book value Less: Unrealized foreign currency translation gains (losses) (1,543) Unrealized gains (losses) on securities and derivatives 6,008 Pension liability adjustment (277) Tota
Slide 22: Reconciliation of U.S. GAAP Return on Equity to Adjusted ROE
Reconciliation of U.S. GAAP Return on Equity to Adjust ROE! (Three Months Ended March 31, In Millions of Dollars) 2020 2019 Net earnings — U.S. GAAP ROE? 8.2 15.0 Impact of excluding unrealized foreign currency translation gains (losses) (0.6) (1.3) Impact of excluding unrealized gains (losses) on s
Slide 23: Reconciliation of Net Earnings to Adjusted Earnings per Share
Reconciliation of Net Earnings to Adjusted Earnings per Share’ (Three Months Ended March 31, In Millions of Dollars) 2020 «2019 4 Inc. Net earnings per diluted share $ 0.78 $1.23 (36.6)% Items impacting net earnings: Net investment (gains) losses 0.62 (0.14) Other and non-recurring (income) loss 0.0