WRAPUP 2-Insurers’ Q4 profits trump analysts’ estimates

* Aflac Q4 oper EPS $1.18 vs est $1.15

* Unum Q4 adj EPS $0.66 vs est $0.64

* U.S., international segments show growth

* P&C insurer Ace, life insurer MetLife also top mkt
(Recasts, adds analyst comments, MetLife results)

By Anurag Kotoky

BANGALORE, Feb 2 (BestGrowthStock) – Aflac Inc (AFL.N: ), the world’s
largest seller of supplemental disability insurance, and rival
Unum Group (UNM.N: ) posted strong quarterly profits, exceeding
analysts’ estimates, and both companies showed growth at their
U.S. segments.

The companies also maintained their outlook for 2010.

Separately, MetLife Inc’s (MET.N: ) fourth-quarter operating
profit beat Wall Street expectations by a penny as the credit
market recovery boosted revenue at the biggest U.S. life
insurer. [ID:nN0299864]

Property-casualty insurer Ace Ltd (ACE.N: ), which sells
insurance to clients in 140 countries around the world, also
reported quarterly earnings above analysts’ expectations,
helped by increased premium earned. [ID:nSGE6110K3]

For Aflac and Unum, a weak U.S. economy, battered by the
widespread credit crisis, has been a concern, but
fourth-quarter results showed some signs of stability.

At Aflac’s U.S. unit, premium income grew 5 percent to $1.1
billion for the fourth quarter. Aided by a stronger Japanese
yen, profit at its Japan segment rose 14 percent to $12.2
billion in dollar terms.

However, Raymond James analyst Steven Schwartz said the
company’s performance in the U.S. include the positive effects
of the recent acquisition of Continental American Insurance Co.
Excluding this, the results were “worse.”

“There’s nothing to suggest that the U.S. market is getting
better for Aflac,” Schwartz said by phone.

He also said despite the inclusion of the new unit, the
company did not raise its outlook for operating income from its
U.S. segment. However, it is still not clear how much that unit
will add to earnings.

“Japanese sales were much better than expected…The
surprising upside in Japanese sales outweighed the downside in
U.S.,” the analyst said.
Aflac had said last year that it was not selected in a
bidding process to provide its products to Wal-Mart Stores Inc
(WMT.N: ) employees. Its U.S. sales growth was also challenged by
weak economic conditions and the loss of a large payroll

“Economies around the globe appear to be recovering, but
the timing of full recovery remains uncertain. As such, we have
set targets of flat sales to a 5 percent increase in both our
U.S. and Japanese operations,” Chief Executive Daniel Amos said
in a statement.

Aflac, which counts on the U.S. and Japanese markets for
the bulk of its business, earned $251 million, or 53 cents a
share for the fourth quarter, compared with $197 million, or 42
cents a share, a year back.

Operating profit — the favourite measure of profitability
for insurance analysts as it excludes investment losses and
gains — was $1.18 a share.

Analysts on average had looked for a profit of $1.15 a
share, according to Thomson Reuters I/B/E/S.

Disability insurers pay benefits in the event of
policyholder becoming incapable of working.


Chattanooga, Tennessee-based Unum earned $199.4 million, or
60 cents a share, compared with $41.8 million, or 13 cents a
share, a year ago.

Excluding investment gains and loss and special items, the
company earned 66 cents a share, the largest disability insurer
in the United States and Britain said.

Analysts were looking for earnings of 64 cents a share.

The company posted an 11 percent rise in U.S. operating
income at $203 million. But premium income from that segment
fell 3 percent to $1.21 billion.

Unum’s U.K. segment also posted a 12 percent rise in
operating profit.

Shares of the Columbus, Georgia-based Aflac rose 2 percent
to $50.30 after the bell, while those of Unum were flat at
Aflac shares dropped significantly earlier last year, as
worries over its investments in hybrid securities — with
characteristics of both stocks and bonds — issued by European
banks grew wider.

However, the company has managed to downplay the worries,
and the shares have recovered sharply from the lows of $10.83
they hit last March to close at $49.70 Tuesday on the New York
Stock Exchange.

Stock Research

(Reporting by Anurag Kotoky; Editing by Gopakumar Warrier)

WRAPUP 2-Insurers’ Q4 profits trump analysts’ estimates