Here's what happened to sales of 5 types of products at Aflac in the first quarter...

1. Accident insurance: $88 million (down 10%)

2. Short-term disability insurance: $73 million (down 9.8%)

3. Hospital indemnity insurance: $55 million (up 5.5%)

4. Life insurance: $25 million (up 14%)

(Photo: Eckehard Schultz/AP)

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5. Dental and vision insurance: $14 million (down 18%)

(Photo: Eckehard Schultz/AP)

Aflac Inc. is hunkering down for COVID-19 turmoil.

The Columbus, Georgia-based insurer said Wednesday, in an earnings announcement for the first quarter, that the company will pay a dividend of 28 cents per share of common stock for the second quarter, on June 1, to shareholders who hold its stock on May 20. That’s up from 27 cents per share for the second quarter of 2019.

But Aflac executives also said that they are withdrawing all earnings guidance for the year, because of concerns about the possible effects of the COVID-19 impact on investments, distribution efforts and overall operations.

“We are understandably taking a tactical approach to capital allocation, leaving all of our options open for deployment and defense,” Daniel Amos, Aflac’s chief executive officer, said in a comment included in the earnings announcement.

Aflac will conserve cash by spending less on moves to buy back its own stock, to keep capital levels high, Amos said.

Resources

Aflac has large operations in Japan, in addition to the worksite marketing business in the United States.

Amos said sales were strong in both Japan and the United States in the first half of the first quarter, began to soften in mid-March, then softened more in April.

Many Aflac agents and brokers have depended on face-to-face sales strategies, and, because of the COVID-19 shelter-in-place rules, they now have trouble meeting consumers face-to-face.

“While our respective sales platforms and distribution partners are working to adapt to the new environment, we believe these trends point to depressed sales at least until we see COVID-19 restrictions subside,” Amos said.

Earnings

Aflac is reporting $566 million in net income for the first quarter on $5.2 billion in revenue, up from $928 million in net income on $5.7 billion in revenue for the first quarter of 2019.

Premiums and investment income were up, and benefits costs were slightly lower. Net results fell because of the effects of a $463 million charge for net investment losses. That compares with a net gain of $71 million recorded for the year-earlier quarter.

Part of the net investment loss figure was the result of the use of a new accounting standard, the Current Expected Credit Losses (CECL) stand, Aflac says.

The CECL standard requires affected companies to estimate what the credit losses on bond holdings, loans, and other credit-related investments might be and to include the estimated future losses in current net earnings.

The Columbus, Georgia-based company’s Aflac U.S. unit, is reporting $326 million in pretax adjusted operating earnings on $1.7 billion in revenue, compared with $323 million in pretax adjusted operating earnings on $1.6 billion in revenue for the year-earlier quarter.

New annualized premiums from sales of U.S. products fell 5.2%, to $323 million.

Hospital indemnity insurance was a bright spot; sales of that product increased 5.5%, the company says.

Agents

The average number of weekly producer equivalents fell to 7,411, from 8,199.

The average production per producer increased to $43,517, from $41,489.

Overall spending on commissions increased to $336 million, from $331 million.

— Read Aflac Ties New Commercial to Fear of Out-of-Pocket Health Care Costson ThinkAdvisor.

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